October Outlook

Equity Insights

I continue to maintain my stance that we are sitting in a Time Correction. The market valuations have corrected slightly - Nifty 50 PE has dropped from 29.9 to 25.75. The fall is not great enough for us to start buying aggressively. The best thing to do in a time correction is hold reserves in Debt/Arbitrage.

Going Forward

The recent corporate tax breaks initiated a knee jerk reaction in the market, and are great for India in the long run, but the price impact has already been factored in the following Friday and Monday post the Finance Ministry announcement. No doubt that there can be further such efforts by the government to boost economy such as individual tax cuts, RBI rate cuts, GST changes, etc - all these actions can move the Nifty upwards towards 12,000 but for how long can those levels sustain? Demand has to change on ground level for the economy to return to shape and strong earnings to return to companies. Once earnings return, they will be able to justify the high valuations of today’s broader markets.

Investor, Not a Trader

I am a long term equity investor. Not a trader. But my wealth management practice requires a lot of patience and understanding of where the fundamental economy is. I will get ample opportunity to enter equity in the future (could take 12-18 months) but it does not matter because downside protection is extremely important for me to preserve the wealth I have worked so hard to create. Please remember: We are not trying to time the market. But just trying to invest responsibly/prudently.

5.10.19