This is that time in Indian markets
when investors are slowly but surely beginning to come back towards equity and
as always, it’s the time when markets have hit all time highs. Now one
dichotomy among the investors is whether it is prudent to invest at this high
point or to wait for correction. Here we will try to answer some of these
questions.
While there is a sense among retail
investors that this is not the time to initiate long positions in markets, we
feel otherwise. One must not forget that markets have even though we are at a
new high; our EPS has almost doubled from 2008 levels. Also, policy paralysis
which was plaguing the market seems to be a thing of the past now. Last 2 year
has seen definite policy action from current Government and the expectation of
a new strong Government will provide further impetus to the markets. Also
inflation appears to have bottomed out and there has been considerable
reduction in India’s Current Account Deficit in past 1 year owing to strong
measures taken by Government and RBI which has resulted in sharp appreciation
of INR from the lows it hit in 2013.
Globally too, recovery is evident
across the globe and markets look poised for more. Although, QE tapering is a
worry in short to medium term, we feel that it further reinforce the fact that
US economy is back on revival path and will benefit a number of export oriented
sectors such as IT and Pharma.
Although, volatile environment tends to
keep investors away from this instrument, we feel that if one has a longer
horizon, equity still remains the best investment instrument considering its
ability to generate returns far superior than any other. However, due care must
be taken while investing in equity and for retail investors Mutual Fund remains
the best mode of investing in equity. At the same time, HNIs must consider
investing in equity through PMS route which will enable personalized monitoring
of their investments.
By Rajat Gupta– Research Analyst (Value Addition) – Concept Securities Private Limited
