Dear Policyholders,
I last addressed you on 7th April 2011 when the Nifty was at 5891 and advised to be defensive. Today, after the announcement by RBI that repo and reverse repo rates would be raised by 50bps, the market took a beating and the Nifty closed at 5562. This translates into about 6pc falls since my last advice.
Now, considering all factors which I have enumerated below , I would like to ask all to be at least 75pc in equities and some more aggressively inclined may get 100 pc into equities. This means that you may get into 75pc in 'growth fund' and rest in 'stable managed fund' .
As for the reasons behind my above advice, the first is that the PE for Nifty as also for the market at large is now about or under 15. This means that the nominal returns on equities will average more than 6pc per annum. This kind of return in equities should be welcome particularly when the economic growth will not be below 8pc even after downward revision.
The world's other markets have not lost, rather have gained over the month of April '11 .
The sector-wise situation is like this that metals, cement, telecom, IT , infrastructure, power, FMCG, pharma and petroleum sectors will not suffer on account of high interest rate regime and would see some improvement in terms of top line and bottom line in the next twelve months.
The sectors that may see some pressure on margins and drop in sales are auto, consumer durables, realty and cap-goods. The banking sector may have some adverse impact but since they have improved profitability by a wide margin over last two years and are at low PE levels there is only a limited down side in their case.
Since the investment by HDFC Life's (the name has changed now) team is in carefully selected companies, your risk is that much lower.
Also, since the inflation is otherwise eating into money's worth every passing day, an investor can not afford to miss the bus when the equities go up. This necessitates the greater equity investment for long term investors which is the profile of most of the young policy-holders.
I have explained to you matters in greater detail so that you may take an informed decision but please keep in mind that ultimately it's your own decision and risks in equity investing should be understood before hand.
Wishing you all happy times ahead,
Krishnakumar Khandelwal
I last addressed you on 7th April 2011 when the Nifty was at 5891 and advised to be defensive. Today, after the announcement by RBI that repo and reverse repo rates would be raised by 50bps, the market took a beating and the Nifty closed at 5562. This translates into about 6pc falls since my last advice.
Now, considering all factors which I have enumerated below , I would like to ask all to be at least 75pc in equities and some more aggressively inclined may get 100 pc into equities. This means that you may get into 75pc in 'growth fund' and rest in 'stable managed fund' .
As for the reasons behind my above advice, the first is that the PE for Nifty as also for the market at large is now about or under 15. This means that the nominal returns on equities will average more than 6pc per annum. This kind of return in equities should be welcome particularly when the economic growth will not be below 8pc even after downward revision.
The world's other markets have not lost, rather have gained over the month of April '11 .
The sector-wise situation is like this that metals, cement, telecom, IT , infrastructure, power, FMCG, pharma and petroleum sectors will not suffer on account of high interest rate regime and would see some improvement in terms of top line and bottom line in the next twelve months.
The sectors that may see some pressure on margins and drop in sales are auto, consumer durables, realty and cap-goods. The banking sector may have some adverse impact but since they have improved profitability by a wide margin over last two years and are at low PE levels there is only a limited down side in their case.
Since the investment by HDFC Life's (the name has changed now) team is in carefully selected companies, your risk is that much lower.
Also, since the inflation is otherwise eating into money's worth every passing day, an investor can not afford to miss the bus when the equities go up. This necessitates the greater equity investment for long term investors which is the profile of most of the young policy-holders.
I have explained to you matters in greater detail so that you may take an informed decision but please keep in mind that ultimately it's your own decision and risks in equity investing should be understood before hand.
Wishing you all happy times ahead,
Krishnakumar Khandelwal
No comments:
Post a Comment