Beginning of the Year these were my views on various asset plays going forward in 2010 and beyond
2010…what’s likely to Go UP and what’s likely to Go DOWN….will help you in rebalancing your Portfolio
Thursday, January 7th, 2010
An extract for Indian Equities from the above is reproduced
INDIAN EQUITIES….It great to be an Indian !…..India recovered brilliantly in 2009 and remains truly the best positioned in 2010 to move up from current Sensex Levels of 17500 as Forward Macro Valuations are fair ( 16 times FY 11 Sensex EPS) and Record FII Inflows, Domestic Consumption and Infrastructure Spending Stories remain intact….In fact I reiterate there is no better and compelling Investment Destination than India and FIIs,no matter what they state,will have litlle option but to continue to come to India in a big way……. Selectively, on micro valuations,the returns would be more compelling…..Expect the Quantum of Primary paper through PSU Disinvestments and other IPOs to be high…this could be a short term dampener for the secondary market….other risks remain rising Food Inflation and Fiscal Deficits…..
What really has played out is that no matter the doublespeak of FIIs,they had no choice but to allocate bigger funds to India as they were getting low returns,low interest and low growth prospects in their own countries and elsewhere…we will remain the best investment destination for years to come…offering great opportunities on scale in Infrastructure and Consumption stories….No Global Investor and Fund Manager can afford to ignore us and not invest here….the prospects of higher returns at relatively lower risk levels are compelling
We have seen FII Inflows cross US $ 16 Billion so far in 2010,with the last ten trading days itself seeing FII Inflows directly on Stock Exchanges cross US $ 3 Billion
I suspect this sudden surge of FII Inflows in September 2010 is largely because the allocated funds of US $ 20-25 Billion for India for 2010 were being gradually invested……most funds were waiting to be invested on Corrections that were indicated especially by Global Cues….Such corrections simply have not materialised and we have just a little over Three months left in Calender 2010 and the allocation for India for 2010 had to be invested fully…they could wait no longer on the sidelines for the awaited correction….we should therefore see a few more billion coming soon….this would propel our Sensex and Nifty to cross the record Highs reached in January 2008….Valuations are high and therefore so is the risk for the short term…FIIs continue to Invest despite their doublespeak on this…….
Do however tread carefully in the Short term as Demand for Large Caps has gone up on Soaring Supply of FII Funds searching for them …..seems Valuation has taken a backseat as Liquidity drives Momentum and Sentiment in the immediate Short Term
India remains a Great Story…and Investment in Indian Equities will work wonders for your Overall Portfolio of Assets…Remain Upbeat and Invested….don’t get cynical…you’ll miss great opportunities
Just reiterating a few thoughts
- Always think Long Term and be true to your Risk Profile
- Be Selective….Don’t buy anything and everything…Core Large Caps are safer bets,especially relatively lower beta FMCG Scrips like ITC at Rs 165 levels and great growth giants like Larsen at Rs 1800-Rs 2000 levels…even Banking Leader,State Bank of India at Rs 2750 levels
- Don’t get unnerved by corrections in the short term……these will be greater opportunities to buy in….a 10% reversal and we’ll be back to 18000 Sensex….a 20% and we’re down to a better buying opportunity at 16000
- Oh ! and don’t get addicted to stock channels !
Cheers !