Market Outlook - Oct 2012
The equity markets rallied in the month of September with Nifty posting 8.5% returns. Gold rose
by 1.92% during the month while Crude Oil fell by 3.44% to $91.68/barrel. WPI inflation increased
to 7.55% in August compared to 6.87% in the previous month. Global markets remained strong on
the back of monitory easing in Europe and US as Bernanke in his last meeting provided for more
policy stimulus. The Federal Reserve said it will expand its holdings of long-term securities with
open-ended purchases of $40 billion of mortgage debt a month in a third round of quantitative
easing as it seeks to boost growth and reduce unemployment. Liquidity remained strong in Indian
market during last month as FII bought equities heavily.
We believe that market is likely to trade with upward bias for coming months as global liquidity
remain strong. Govt. of India has also started reforms which will help Indian markets to attract
foreign flows but to enter into secular bull run India need huge investment in infrastructure sector
which is not taking place. 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 recommend
Dynamic Bonds Funds and Income Funds. We expect interest rates to come down in second half of
the year, hence exposure in Income/ Bond Funds will yield good returns. We maintain our view to
hold 5-10% allocation to gold in the overall portfolio.
The equity markets rallied in the month of September with Nifty posting 8.5% returns. Gold rose
by 1.92% during the month while Crude Oil fell by 3.44% to $91.68/barrel. WPI inflation increased
to 7.55% in August compared to 6.87% in the previous month. Global markets remained strong on
the back of monitory easing in Europe and US as Bernanke in his last meeting provided for more
policy stimulus. The Federal Reserve said it will expand its holdings of long-term securities with
open-ended purchases of $40 billion of mortgage debt a month in a third round of quantitative
easing as it seeks to boost growth and reduce unemployment. Liquidity remained strong in Indian
market during last month as FII bought equities heavily.
We believe that market is likely to trade with upward bias for coming months as global liquidity
remain strong. Govt. of India has also started reforms which will help Indian markets to attract
foreign flows but to enter into secular bull run India need huge investment in infrastructure sector
which is not taking place. 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 recommend
Dynamic Bonds Funds and Income Funds. We expect interest rates to come down in second half of
the year, hence exposure in Income/ Bond Funds will yield good returns. We maintain our view to
hold 5-10% allocation to gold in the overall portfolio.
