Diwali the festival of lights is also an auspicious occasion to review one's investment portfolio. Samvat 2069, marking India's official new year (The Vikrami era) has commenced on March 23, 2012. But for the business and the broker community new Samvat commences on Diwali day, when they introduce new books of account after performing 'Lakshmi Puja', the worship of the goddess of wealth. So this is an ideal time to review the wealth earned on an individual portfolio. Let us review the potential of each major asset class during Samvat 2069:
Fixed income Instruments: The interest rate cycle has almost peaked out and we could see a reduction of at least 1-1.5% in the benchmark interest rates till next Diwali. Bank deposits have shown a decent growth in the last year, and investors looking to invest in safe havens are advised to book long term deposits of 3-5 years before interest rates start falling. Bond market which has given a stellar performance in Samvat 2068, may remain subdued as risk appetite returns.
Bullion & Precious metals: Gold has lived up to the ancient proverb 'All that glitters is gold' having given around 15% return last year. Silver has also added to its lustre. But most of the gains in Samvat 2068 are attributed to the depreciation of Rupee. The Rupee has depreciated by over 12% to a level of Rs.55/dollar after briefly falling to the levels of 57/58 in July-August 2012. The fear generated out of the "Fiscal cliff' in US and the consistent support of Obama for Ben Bernanki, the global liquidity position shall remain comfortable, pushing Gold/ silver prices to new highs in Samvat 2069. Gold prices currently hovering at $1720/ounce are likely to appreciate towards $2100 mark in a years time, marking a gain of 20%. But the impact in India will be muted as Rupee is also likely to strengthen by at least 10% once the Indian govt. is able to fix its fiscal/ trade deficit. We could see rupee/ dollar parity of 50 by March-April 2013.
Real Estate: Investment in property has yielded super normal returns in the past 3-4 years. But the growth has slowed down in the later half of samvat 2068. The realty market is currently overheated due to excessive speculation. Dearth of genuine buyers in the market does not auger well for the orderly growth of this market. Social activism is exposing the nexus between businessmen and politicians in garnering real estate at rock bottom prices and then jacking up the prices artificially to make super normal profits. There has been a tendency amongst builders to offer more and more luxury projects without adequate demand to support the high prices. Real estate market, other than the affordable housing, is headed for a massive slowdown in Samvat 2069.
Equity Market: Equity market has given a return of around 9% in Samvat 2068. However, from the view point of the small investor markets have hardly moved between January 2008 to Diwali 2012. The broader indices have yet to top the highs (21000 on sensex and 6300 on Nifty) made during January 2008. This is precisely the reasons small investors have shun the market. The markets have gone up in the recent past mainly on the back of FII investments. FII's continue to be bullish on the Indian equity market. small investors are advised to follow the FII's as the bad times in the markets are over. The next major bull run will be triggered by the announcements of interest rate cuts by RBI in the last quarter of current fiscal. Markets could test the earlier top of 6300 on the Nifty during Samvat 2069. The volatility will, however, continue and the markets may move in a broad range of 5200-6400 on Nifty till next Diwali. Investors are advised to enter near the lower end of this range for a 20% return within a year. I shall discuss in detail the prospects of equity markets in my next post.
I wish all investors a very fruitful Samvat 2069.
Real Estate: Investment in property has yielded super normal returns in the past 3-4 years. But the growth has slowed down in the later half of samvat 2068. The realty market is currently overheated due to excessive speculation. Dearth of genuine buyers in the market does not auger well for the orderly growth of this market. Social activism is exposing the nexus between businessmen and politicians in garnering real estate at rock bottom prices and then jacking up the prices artificially to make super normal profits. There has been a tendency amongst builders to offer more and more luxury projects without adequate demand to support the high prices. Real estate market, other than the affordable housing, is headed for a massive slowdown in Samvat 2069.
Equity Market: Equity market has given a return of around 9% in Samvat 2068. However, from the view point of the small investor markets have hardly moved between January 2008 to Diwali 2012. The broader indices have yet to top the highs (21000 on sensex and 6300 on Nifty) made during January 2008. This is precisely the reasons small investors have shun the market. The markets have gone up in the recent past mainly on the back of FII investments. FII's continue to be bullish on the Indian equity market. small investors are advised to follow the FII's as the bad times in the markets are over. The next major bull run will be triggered by the announcements of interest rate cuts by RBI in the last quarter of current fiscal. Markets could test the earlier top of 6300 on the Nifty during Samvat 2069. The volatility will, however, continue and the markets may move in a broad range of 5200-6400 on Nifty till next Diwali. Investors are advised to enter near the lower end of this range for a 20% return within a year. I shall discuss in detail the prospects of equity markets in my next post.
I wish all investors a very fruitful Samvat 2069.
2 comments:
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