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Markets Riding Highs – What to do?

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Today India is celebrating “Ganesha Chaturthi” with full fervor and dedication. Lord Ganesha symbioses knowledge and wisdom. Hindus starts all their ventures after offering prayers to him. He is also worshipped for being “Vighnharta – Destroyer of all evils.”

 

Last year we explained you how the Ganapati Festival helps you understand the nuances of investment management. Read more Ganapati Festival – From Sthanpana to Visarjana & Your Investments

 

Current Market Outlook – In recent past markets have recovered much faster than anybody expected. All economies across world are struggling hard to come back to their normal forget talking about growth. India still have partial or full lock down imposed in many parts of the country. Some odd signals like online sales, private car & 2 wheelers or GST collection etc. do bring peace, still until the whole nation is opened to the extent that schools are fully functional, one can’t be sure of corona having been defeated and economy functioning to its full capacity.

 

In our communication Green Shoots in Economy & Coronavirus – Should you invest in Equity  on 16th February, we talked of possibility of Corona virus turning out to be a Black Swan event and cautioned you against investing into equity. We cautioned you again in our communication on 24th February. In our communication of 15th March, we advised you to keep cash ready to exploit the opportunity that markets were going to present and on 26th March we had asked you to put out your buckets when it’s raining gold. To be honest we didn’t know opportunity will come so soon and off course never imagined markets will recover this fast.

 

What to do now - Present stock market rally is a concentrated rally limited to few stocks and can largely be attributed to liquidity being infused by central banks into the market. Since this has no fundamental base to it, markets must correct. But when they will correct is again a Yaksha – Prashna that has no definite answer. One can only make guesses. It may happen now - within couple of weeks or markets may keep rallying till US elections and then correct or correct around new year when most FIIs go on holidays. We at InvestmentMitra would like to remain cautious till markets correct by around 20% or more or till new year 2021 begins.

 

For Conservative Investors – If you are a conservative investor and are looking to lock decent fixed returns over medium to long term, you should explore guaranteed return products offered by some insurance companies. Like one company offers you a guaranteed payout of upto 91,000 for 25 years or upto 99 years of age against a premium of one lakh paid for ten years. Another company offers guaranteed payout on completion of policy term. These policies offer tax free annualized returns upto around 6%. That is quite decent when all prominent banks are offering lesser and taxable interest on fixed deposits with them. .

 

One may also consider peer to peer to lending (P2P). These are being offered by RBI registered NBFCs and one can create a portfolio to earn upto 15% interest. You may also look at state guaranteed bonds. Talk to your Investment Mitra to advise you what fits your bill.

 

We pray to the Lord of wisdom to show us the right path for our life and the investments and help us make good money out of the markets.

 

Team InvestmentMitra wishes you “Happy Ganesh Chaturthi”!

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