We live in an unknown territory today and hence it's time we analyze a little more than usual before investing.
Global uncertainty is at a high. We do not know what the world leaders will do in this era of tariffs. It's better therefore to look more inside than outside.
Indian equity market is neither cheap nor expensive. The GDP forecast is also trimmed down by all rating agencies and RBI. We may see lower EPS growth. Therefore, it's time to cut down return expectations maybe to single digit or early double digits. The risk reward ratio is not very favorable at this moment.
Central Banks like RBI and others across the globe have always used interest rates to maneuver the countries growth and inflation cycles. Right now, RBI looks like it will do anything to get India growing. Yields therefore will fall. Good time for debt investments.
Crude oil’s fall from the top is a huge windfall for India. With global GDP slowing, crude can be expected to be in this range or lower. US Dollar is expected to be weak too. If only government can pass on the benefits, it would be great for consumers
FIIs have already sold a lot in India and India is better placed than many countries thanks to lower tariff and lower exports to US. So even if US Yields go up, India may see lesser FII outflow, but it can still see some.
Adding all this together we would go higher on long term debt and spread your equity investments over 3-6 months period. Faster deployment if earnings pick up, slower deployment if GDP slows with your new money.
We continue to be structurally positive and don’t see the need to hold new money in cash or FD. That’s a strict NO.