Do it yourself

Though one calendar quarter is too short a period to change one’s investment strategy, I have a habit of reviewing my assessment of markets and investment strategy every quarter. In my last Outlook and strategy review, I had highlighted that given the present circumstances, the outlook for the next year is pretty simple and straightforward. The return expectations of the investors may be moderate and focus may remain on capital preservation. I therefore continued with my standard asset allocation, and decided not to trade actively. In my latest review of market outlook and investment strategy I noted the following: (a)   The economic recovery post pandemic continues to be uneven. The larger unorganized sector continues to lag, while the formal sector is progressing well. The tax collections are therefore buoyant, and fiscal pressure is not constricting the public sector spending. The overall consumer demand growth however remains poor. The overall economic growth estimates...

 The new year of the Goddess of Wealth (Mahalakshami) has started on a rather somber note for the Indian equities. After a very strong year since Diwali of 2020, the markets appear tired and uncertain. The tailwinds of easy money and lower borrowing cost, which were among the factors that supported strong market performance since Diwali of 2020, appear weakening; whereas the headwinds of inflation, tighter money, and slowing growth appear gaining strength. The valuation comfort that aided investors’ sentiments last year, is no longer available. The opportunity provided by the panic reaction to the Covid-19 pandemic has been mostly exploited by investors. Most of the low hanging fruits have already been plucked. The risk reward ratio is no longer favorable at the broader levels at least. The Covid-19 pandemic itself, and the response to the pandemic created numerous opportunities in past one and a half year. The market readily identified these opportunities, and investors posi...

2021 – Market Outlook and Investment Strategy The 2020th year of Christ is ending on a mixed note. Economically, socially & politically - the environment is filled with a myriad of emotions. There is  hope and anticipation  of victory over pandemic and life returning to normal in 2021. Each piece of improvement in the economic data and healthcare statistics brings relief and stokes optimism. The wealth effect created due to higher asset prices is comforting people in more than one ways. The technological advancement and digitalization has made tremendous progress in past 12 months. The global effort towards climate change appears more promising than ever. There is  fear  of new variants of Covid-19 virus disrupting the recovery effort and bringing the life to a standstill gain. There is widespread distress caused by the health and economic shock of pandemic. The people in numerous countries are unrestful as they resist increased state surveillance and struggle to...

Since I reviewed my investment strategy three months ago ( see here ), few things have changed in the economy and market place; the most noteworthy being the following: (i)     The economic slowdown has become more pronounced. Both consumption and investment demand have slowed to multiyear low levels. The government has admitted that this slowdown is unique in nature, since it is for the first time in India that a economic slowdown has been triggered by poor demand growth rather than the usual supply side constraints. Many corporates, especially consumer facing businesses like FMCG and Automobile have echoed similar views. However, the recognition of the unique character of the slowdown within the government has been quite delayed. This has resulted in some misdirected policy actions. (ii)    The government has started the process of restructuring of tax laws, beginning with the announcement of new structure of the corporate tax rates. This has ...