MARKET OUTLOOK - DEC 2013
The equity markets consolidated in the
month of November with Nifty falling by 1.95%. Gold rose by 1% during the month
while Crude Oil fell by 4.6% during the last month. FII remained net buyers in
Indian equity market but Mutual Funds continued selling equities during the
month. Indian Rupee has lost 1.93% against US dollar during the month.
Equity market has rallied over the last
three months primarily because of two reasons. One is RBI action to contain the
rupee fall by taking prudent measures and instilling confidence in the market.The
second is FIIs betting on BJP win in coming Lok Sabha election. It started with
investment bank Goldman Sachs upgraded Indian equity markets on hopes of a
Narendra Modi-led BJP forming the next government, leading foreign
brokerages CLSA and Credit Suisse too see prospects of significant gains in the
market run-up to the general elections early next year. The assumption is that
the new government will act in a decisive manner and introduce bold new
reforms. But we need to act in a prudent
manner by taking close view of the situation and maintaining proper asset allocation and follow rebalancing strategy in case of good run up of equity markets in coming
months. We need to take a close watch on this assumption as election
outcome is uncertain.
On equity side we hold our advice to
investors to keep buying equity mutual funds through SIP/ STP. On debt side we
continue recommending Accrual based debt funds with clean portfolio and Dynamic
Bond Funds with low volatility with 12-18 months time horizon.
