Some food for thought
"Always behave as if nothing had happened, no matter what
has happened."
—Arnold Bennett (English Novelist, 1867-1931)
Word for the day
Seriatim (Adv)
In a series; one after another.
First thought this morning
The recent fire accident in a coaching center in city of Surat in
Gujarat is devastating and unpardonable. Administration in many cities have
since ordered safety inspections of these caching centers.
It is unfortunate that it took loss of 20 precious lives for
authorities to wake up to the potential magnitude of this problem. Millions of
such coaching centers are operating in almost every town and city of the
country. Everybody has seen this. Everyone knows about their conditions and
callousness toward safety of students. Children of local politicians,
government officers, and police officers also attend classes in these centers.
Most of these centers are right there on the main roads,
blocking traffic and creating nuisance. Most of these are unauthorized and
operate from residential areas creating nuisance for local residents.
And the worst part is that these coaching centers owe their
existence to the inefficiency of the education system. Proper functioning of
schools and institutions of higher learning should totally obliterate the need
for these coaching centers.
In my view, the government must immediately consider
implementing some radical changes in the whole education system, especially the
institutional framework, curriculum, learning objectives, examination system,
and teaching profession. Incremental changes to the existing system would be
inadequate.
Chart of the day
Notes
from my Diary
Post declaration of general election results there is a general
sense of optimism in the Indian equity markets. Benchmark indices have scaled
new highs. Broader markets have rallied even harder.
The sector rotation from consumption and defensives to cyclical
was visible since couple of months. The shift has accelerated materially.
Bonds have rallied in the hope that the new government will
continue to adhere to the fiscal discipline it has followed in past few years.
INR has also appreciated as the outlook for inflows has improved. Recent
correction in global crude prices may have also supported the rally.
I find it appropriate to revisit my investment strategy and
investment objectives to check if any realignment is required.
As per the above, my current portfolio positioning is as
follows:
Current Asset allocation
Current equity investment strategy
My equity portfolio mostly comprises of quality mid cap stocks.
I am overweight on Construction, Capex, Real Estate, Healthcare,
PSU Banks, Specialty Chemicals and select NBFCs. I am underweight consumer
staples, except high income discretionary consumption like alcoholic beverages.
I have allocated one third of my equity allocation for active
trading which is to be gradually increased further. I prefer trading in large
banks and liquid cyclical.
I was not positioned for any significant market decline post
elections.
Review
2019 YTD Financial, realty and infrastructure sectors have
indeed performed best in the market. The outperformance has been rather stark
in past one month. Pharma, IT, Auto and consumption in general have been
notable underperformers.
In the year 2019 till date, Nifty has yielded more than 9%
return. Most of this return is contributed by financials. Nifty Midcap 100 has
yielded negative 1% return. However, in past one month, Small cap and midcap
indices have outperformed the benchmark Nifty. I see this trend continuing.
I am therefore maintaining my investment strategy and outlook.
However, given that the rates are widely expected to fall from the current
level, and earning cycle is not likely to pick up in next couple of quarters, I
am scaling down my return expectations from equities back to 18%. Overall
return expectations now stand reduced to 14-15%.
