Market Outlook Dec 2011
The month of November witnessed sharp correction in equity markets, which completely eroded
gains made in the month of October. India’s GDP growth rate declined to 6.92% for second
quarter showing slowdown in economy. The falling rupee proved major dampener for Indian
equity markets on concerns of increased fiscal deficit. India Inc is facing problems in imports as
well as paying its foreign debt because of rupee depreciation. European countries are pushing
hard to resolve the crisis but it may take time for Europe to come out of it completely. Gold rose
6% in the month while dollar rose 6.73%. Crude oil price increased from $93.49/barrel to
$99.13/barrel. FII sold Indian equities heavily while DII bought some equity.We believe that situation on domestic front will improve gradually but mood remains pessimistic on bourses and there are very few buyers for Indian equities. Time like these provide opportunity to accumulate good stocks as well as quality mutual fund for long term. We hold our advice to
investors to keep buying equity mutual funds through SIP/ STP route to generate wealth over the long term.
On debt side we continue recommending FMPs as Bank CDs and other CPs are available at very attractive rates and locking these papers in FMPs will yield good returns.
We maintain our view to hold 10% allocation to gold in the overall portfolio.
