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Gloomy News & Investment Decision

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 "The market does not trade upon what everybody knows, but upon what those with the best information can foresee" – William Hamilton

Bank Collapse in USA - After the Adani saga it was the turn of some sensational news from so called robust but deteriorating financial system of USA. Collapse of Silicon Valley & other banks in USA are just the cases of cash flow mismatch and investment calls going wrong. By now you must have read enough on this. Still should you wish to understand what this story is all about, you may call your InvestmentMitra for the same. Thankfully SVB hadn’t financed any of the ventures from Adani group, otherwise pessimists would have declared doomsday for India as well.

Adani Saga - Good part about Adani’s saga is that Adani as a group has interest across diversified industries and geographies. It has created a good mix of domestic and international debt. Adani group’s businesses are real. The promoters have prepaid a good amount of debt maturing over next few months.

Current Markets - With current price to earnings per share at 20.08, price to book value at 3.99 and market cap to GDP at 84.77, stock markets are fairly valued. They are not cheap yet. Most of the fundamentals of the economy look positive except for political environment. Markets are down by over 10% from their peaks. That should offer some solace to bearish or pessimist people.

Interest Rates – Bank’s collapse in USA can largely be attributed to over-paced interest rate hikes by US federal bank. And with inflation easing and interest rates exerting pressure on financial health of businesses, more pronounced in financial sector and economy at large, central banks will have to rethink their strategy on interest rate hikes. We don’t see rates coming down immediately but there can be a pause at least. Us monetary policy review is just about a week away and RBI’s about a fortnight.

Where to Invest: Debt & Equity - In October we had advised you to start putting money in long term debt and in January communication, we suggested you to complete your debt portfolio. Complete it at the earliest, if you haven’t done it yet.

We don’t know if the equity markets will bounce back from here or it will test more deep waters before flowing up again. But certainly now is the time when you should also start increasing your equity exposure by shifting  funds kept in balance advantage funds or other debt investments for this purpose.

We strongly believe that next couple of decades or more belongs to India and whenever the markets start booming they will bloom very fast. We wish you very happy investing experience. And should you have any query or wish us to assist you for your investments, we are very happy to do the same. You may contact your InvestmentMitra or reply to our post or write to contact@investmentmitra.com

Happy Investing!

Team InvestmentMitra

 

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