YEAR 2015 to 2018 : Will be years of Indian Equity

YEAR 2015 to 2018 : Will be years of Indian Equity

It’s been an encouraging year with equity markets topping and making new all-time highs. With various leading indices delivering between 30-70 percent returns, 2014 has created wealth for retail investors. The year 2015 is conducive for investing as the markets could consolidate and investors, big and small, may find opportunities to make long-term investments.

Indian household savings have been over-invested in physical assets like gold and real estate which failed to deliver returns for investors over last two years. In 2015 we recommend investors to incline their portfolios towards financial assets like equity and
fixed income, as they have the potential to create wealth for investors over the longer term.

The new Government’s reforms have set the stage for moving Indian economy from vicious to virtuous economic cycle & may boost corporate earnings. Initiatives like Make in India, Digital and Skill India could place India in high growth trajectory.
Further, India’s macro fundamentals like Current Account Deficit, inflation, lower crude prices and growth impulses are improving. The good news is that Indian economy is poised to clock a high growth rate in 2016 & 2017, after consolidating for much of 2015. With Nifty’s current one-year forward Price Earning of 14.9x,
market is also fairly valued. The beauty of market in 2015 is that it could be a great year to make investments in first six-nine months in a staggered manner to create wealth over next three-five years.

In equities, the attractive themes can be Banks because the leverage cycle is expected and Utilities because we are positive on interest rates coming down. There is also scope for capacity utilization to pace up in many of the industrial and manufacturing
sectors. As the capacity utilization picks up, equities could deliver reasonable returns

The outlook for equity markets is good over 2016 to 2018, but there could be brief periods of volatility in 2015 taking cues from global factors. With the current price of crude and good growth prospects, India is one of the attractive emerging markets in the
world and therefore, there lies an opportunity to invest in Indian equities for the long term. To beat volatility, investors should adhere to asset allocation which spreads the risks across asset classes. Alternatively, investors could also invest in products that
offer the asset allocation strategy and benefit out of volatility.

Happy Investing




Source : ICICIDirect.com