Year 2009 will be remembered for the roller coaster ride that saw the fortunes of investor community swaying between 'doom & boom'. Most global markets rose handsomely from their yearly lows. The broader stock indices in India, SENSEX and NIFTY recovered over 100% from the lows touched in March 2009. The year also marks the end of the most eventful decade in the history of India. From a sleepy economy growing at around 4% p.a. India has been transformed into a vibrant and fast growing economy with the GDP growth touching a high of 9% during the decade.
A large part of the economic turnaround and the equity markets rebound can be attributed to the liquidity overhang, initiated by the Federal Reserve and followed by other Central banks in the shape of fiscal stimulus packages. The first 3 months of the year upto March 2009 resulted in dollar outflows, but since then FII's have pumped in more than US$ 15 billion into our markets. Moderate inflation coupled with low interest rates helped in the turaround of the corporate sector. The economy is now likely to grow at around 7.5% during fiscal 2009-10, despite a poor monsoon. Although volatility continued to dog the markets in 2009, yet risk appetite has returned back to the markets.
The market regulators on their part have played a very positive role in the interest of small investors. The abolition of entry load on Mutual Funds, and reduction of charges on ULIPs are a welcome measure. The regulators have taken measures to improve transparency while selling of financial products. By the end of the year buying/ selling of Mutual Funds through stock exchanges has also materialised. The year also saw unveiling of the draft Direct Tax code, which envisages sweeping changes in the Income Tax structure. The 'Satyam' scam that erupted in the beginning of 2009, encouraged the Govt. to come out with ammendments in the Companies Act to safeguard the interests of minority shareholders. The new pension scheme for individual investors came into force from May 2009.
Year 2009 is ending on a bullish note, a year in which investors would have made money in most financial assets. At this juncture the risk-reward ratio is looking slightly stretched, and investors are advised to tread cautiously in 2010, as making money would not be easy. Portfoilo selection would be a tough task during the coming year, and the role of a matured financial advisor would become more important if money is to be made in the markets. Indian economy continues to be in good shape and the bottomlines of the companies are likely show a decent growth. However, the following negative factors should be watched carefully or else it may spoil your party in 2010:
A large part of the economic turnaround and the equity markets rebound can be attributed to the liquidity overhang, initiated by the Federal Reserve and followed by other Central banks in the shape of fiscal stimulus packages. The first 3 months of the year upto March 2009 resulted in dollar outflows, but since then FII's have pumped in more than US$ 15 billion into our markets. Moderate inflation coupled with low interest rates helped in the turaround of the corporate sector. The economy is now likely to grow at around 7.5% during fiscal 2009-10, despite a poor monsoon. Although volatility continued to dog the markets in 2009, yet risk appetite has returned back to the markets.
The market regulators on their part have played a very positive role in the interest of small investors. The abolition of entry load on Mutual Funds, and reduction of charges on ULIPs are a welcome measure. The regulators have taken measures to improve transparency while selling of financial products. By the end of the year buying/ selling of Mutual Funds through stock exchanges has also materialised. The year also saw unveiling of the draft Direct Tax code, which envisages sweeping changes in the Income Tax structure. The 'Satyam' scam that erupted in the beginning of 2009, encouraged the Govt. to come out with ammendments in the Companies Act to safeguard the interests of minority shareholders. The new pension scheme for individual investors came into force from May 2009.
Year 2009 is ending on a bullish note, a year in which investors would have made money in most financial assets. At this juncture the risk-reward ratio is looking slightly stretched, and investors are advised to tread cautiously in 2010, as making money would not be easy. Portfoilo selection would be a tough task during the coming year, and the role of a matured financial advisor would become more important if money is to be made in the markets. Indian economy continues to be in good shape and the bottomlines of the companies are likely show a decent growth. However, the following negative factors should be watched carefully or else it may spoil your party in 2010:
- Inflation (WPI) has started to rise at alarming levels, it may cross 7-8% by March 2010.
- Withdrawal of stimulus packages may put pressure on the dollar, and may sqeeze the liquidity in the system.
- Political turmoil is feared in the country after announcement of the formation of 'Telengana'.
1 comment:
Please give us an insight into where to invest in 2010 to get a reasonable return on investment. Will gold be a good bet at current levels?
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