Liq­uid­ity, Earn­ings To Push SEN­SEX To New Highs

Dalal Street Investment Journal - - EDITOR'S KEYBOARD - V B PADODE Editor-in-chief

Who would have thought Sen­sex could go so high, so fast. Well we did, didn’t we? Sen­sex above 33,000 is merely re­flect­ing the bullish mood in the mar­kets which we have been re­peat­edly com­mu­ni­cat­ing. The re­cent en­thu­si­asm in the In­dian mar­kets can be at­trib­uted to the govern­ment’s three ground-break­ing steps to kick-start growth and em­ploy­ment:- Pro­posed in­jec­tion of Rs 2.11 lakh crore as re­cap bonds in cap­i­tal-starved PSBS :- This move is ex­pected to act as a force mul­ti­plier for the growth needs of the PSBS and will also help in ac­cel­er­at­ing their tepid credit growth. This will also help PSBS ar­rest mar­ket share loss to pri­vate banks and NBFCS, which are well cap­i­talised.

Rs 14 lakh crore capex plan over next 5 years:- This capex plan in key in­fra­struc­ture sec­tors like rail­ways, power, road and hous­ing can be ex­pected to cre­ate em­ploy­ment op­por­tu­ni­ties and im­prove the ag­gre­gate de­mand in the econ­omy. This move can di­rectly im­pact sec­tors such as cap­i­tal goods and en­gi­neer­ing, con­struc­tion and ce­ment.

MSMES :- The govern­ment has forced the large PSUS to reg­is­ter them­selves on TREDS plat­form and clear their dues to MSMES within 90 days. This is ex­pected to be ben­e­fit the MSMES as ac­cess to cap­i­tal was hold­ing back th­ese large em­ploy­ment-gen­er­at­ing en­ter­prises.

I am telling you, this govern­ment means busi­ness and all the right steps taken today will ben­e­fit the econ­omy in the com­ing years. Many may be won­der­ing why eq­uity mar­kets are scal­ing news highs. One must un­der­stand that eq­uity mar­kets are for­ward-look­ing and al­ways dis­count the fu­ture. The fu­ture be­longs to India.

In this is­sue, we thought it will be ideal to iden­tify stocks that most have ig­nored and are trad­ing at rel­a­tively cheaper val­u­a­tions. In the cover story we dis­cuss the ben­e­fits of con­trar­ian in­vest­ing and also high­light the chal­lenges faced by a con­trar­ian in­vestor. Check out whether con­trar­ian style of in­vest­ing suits you as an in­vestor.

Mu­tual fund space is a crowded one. More than 50 per cent of the eq­uity mu­tual fund schemes fail to out­per­form the bench­mark in­dex re­turns. In our spe­cial story, we have come up with a list of mu­tual funds that one can exit from at this point of time. I am sure the rec­om­men­da­tions will help you align your mu­tual fund port­fo­lio in a way that max­imises re­turns.

Of­ten, we hear from in­vestors that risk man­age­ment is not their forte and is fre­quently ig­nored by many in­vestors. We have in de­tail ex­plained the ba­sics of risk man­age­ment and have fo­cused on the best risk man­age­ment prac­tices that one can fol­low to op­ti­mise re­turns. Hope you find our sug­ges­tions valu­able.

The rally in global mar­kets trig­gered by the US and Ja­panese mar­kets sig­ni­fies im­prov­ing prospects of global econ­omy. Mar­kets will soon start fo­cus­ing on earn­ings and, in my view, the earn­ings will be key trig­ger for the mar­kets in the com­ing quar­ters, along with var­i­ous govern­ment ini­tia­tives to pro­pel eco­nomic growth in India.while mar­kets are no doubt good, worst of the in­vest­ing er­rors are made in good times. So, stay cau­tious and pick your in­vest­ments with ut­most care. Re­main tuned to DSIJ.

Happy In­vest­ing !

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