Market Outlook – September 2022

Q: How much is our return expectation?

A: 15% CAGR over 10 years.

Q: How patient are we with our investments?

A: Less than 6 months.

A year before, Nifty was trading at 17,368 and it is at 17,540 levels, at present. In between it went down multiple times, and even touched a low of 15,183. Different clients, entering at different levels, would have experienced different returns, in the same period. Client investing a lumpsum amount a year back would be at same levels, whereas a client entering at years low, would see a 15% jump in their returns. Clients using an SIP mode of investment, would see a 5% growth, and Clients having started an SIP 5 years back, would have generated a 15% CAGR returns.

5 Year SIP, as per Moneyfrog model, would have fetched even higher CAGR returns, over a traditional method of investing. Therefore, the key to investment is valuation, right allocation, timing & patience. Do not jump to the conclusion, in a short period of investing and above all, do not fear. Thumb rule is to keep investing regularly (i.e., monthly) and give time for markets to perform.

September Outlook: Nifty jumped from 17,340 to 17,759, a mere 2.4% jump. It remained range bound throughout the month and unable to break the 18K levels. Nifty PE is trading at around 21, which is above fair value. FIIs were the net buyers with 22K Cr buying and DIIs were sellers with 7K Cr selling in the cash market. RBI increased the repo rates by 50 bps to 5.4% and expected to raise it further in next policy meet. Inflation cooled of from 7.01% to 6.71% mainly due to fall in oil prices.

Key Economic Events: 1) Sep 13: US CPI; Sep 21: 2) FOMC Rate Hike decision, new Dot Plot (75 bps hike expected); 3) Sep 30th: RBI MPC meeting.

Festival season has begun, and monsoon this year also has been good. We expect a bumper sale across all sectors this year. Celebrations are on with no Covid restrictions this year, which will have a positive impact on consumption sales. Except Fed rate hike, where we do not see any major negatives this year and hence remain positive on markets breaking new highs. Any further fall may be treated as the last chance of entering at the market lows.

Happy Investing!!!

Mushtaq Kazi
Mushtaq is the co-founder of Mushtaq has had corporate stints with Kotak Securities & IIFL group. He holds an MBA degree from Pune University.
His interests include cooking & gardening. When he is not cooking or gardening, he is writing.