Even as I pen my thoughts on the direction of the markets in the coming days after a year of flat performance, I see the markets are down sharply with the BSE SENSEX down by about 600 points and the NIFTY 50 by some 150. Essentially 83,500 in the level we are at currently. So how daft am I for pointing out to the level of one lac.
So is “THELAC” OR THE 100,000 MARK for the BSE SENSEX that good a story to get your money. And the obvious answer is – do the math!!! It is just 33% away from where we are and if we are doing 12% per annum compounded annually, we will require barely 30 months to reach there. And is a 12% pa top up on my portfolio attractive. On a personal basis, yes, it is but the last few years have upped my “greed” and a little better will help. So, will that happen??
There is a general consensus amongst market movers and shakers that equity markets will perform much better in the coming days than it has in the last 16 odd months. The time correction has run its course and corporate results are not discouraging at all. The SIP numbers have hit their highest value last month reaching above Rs, 29,000 crores. The GST slab rationalisation has added fuel to demand and if the festive season is any indicator, the consumers are back in force. Notice the number of consumption themed schemes launched by fund houses to meet the consumption uptick and you have an idea of how favourably it is seen. The budget allowed a very large minimum slab and that also has left a very tidy number in the hands of the people. The immediate fallout of this was not evident but recently the uptick is very encouraging. The factory index has also shown a very positive trend and remains at a higher point than in the recent past. All of this augurs well for the manufacturing segment. Cars, air conditioners, higher end television sets and gems and jewellery and branded apparels have done very well, lending credence to the higher spending amongst people. The tours and travel segment is roaring and this has a significant multiplier in the economy. Inspite of the geo political tensions the crude prices have remained largely flat and within very accepted range. Inflation remains benign
Overall, there is every indication that better days are ahead.
But what are the impediments? Geo politics remains a concern. Although the world has heaved a sigh of relief at the Israel-Hamas agreement, it remains to be seen how durable it is. Any substantial deviation will see higher freight rates, global uncertainty and a rise in prices. The United States led trade disruption is very detrimental to India. Even though the powers that be are doing their best to settle it, the time taken and the posture of both sides, with an eye on their core voters is unsettling. India and Indians have come off receiving a shorter end of the bargain. And that includes heavyweights in the listed space. So that’s another worry. The continuous slide of the INR versus major currencies makes a lot of imports expensive for us. Which has a cascading effect on inflation. And the foreigners taking out money from our markets indicates they are convinced other more profitable economies are there. Which in turn requires more money from us here to sustain markets.
On the balance, it seems the positives far outweigh the negatives. And it is very important that the positives are structural but the negatives are reversible. So, all hopes are up to get a profitable next six months. The caution being the election results in Bihar could be a worry. But if the trade agreements with the United States get the go ahead, expect a decent rally. Are we looking at a 10% upside in the next 6-8 months. I am very positive, it will happen.
Well written. Didn’t miss a word. THELAC!