Sensex Rebound

What a week it’s been; the entire budget slide of minus 1k points, went positive within two days. Hence, Indian Indices Nifty & Sensex, again shined back to their 12k & 40k levels, bringing positivity in the market, leaving behind the Budget disappointment and China slow-down, on account of Corona virus.

I attended Kotak Funds meet this week & Key Takeaway; 

  • Market crashed on budget day, mainly due to US market fall of 603 points & Chinese market fall of 9%, due to Corona virus fear.
  • Assumptions taken in budget, are achievable, but very difficult, keeping in mind Govts past track record. For instance: from Telecom, Govt is expecting 1.3lac Cr in AGR collections, but if Vodafone defaults 50K Cr, what will happen then?
  • Disinvestment targets are Tall, but achievable, considering BPCL, LIC & Concor disinvestment is done, on-time.
  • Fiscal Deficit is within the cushion range & Govt will be maintaining it further, as there is enough room for higher fiscal deficit to support growth. For instance: cushion range for fiscal deficit is 4.5% & Govt is maintaining at 3.8% & 3.5% for FY-20 & FY-21 respectively.
  • Most Indians consume Chinese goods; to curb the same, customs duty was increased in many products, to boost Make in India.
  • Tax rates simplification, is to aim, increase in spending among millennials (to boost consumption).
  • Current market favours, huge interest in Mid & Small Caps accumulation. Also, one should reduce positions in Large Caps. Large Cap Stocks are in a bubble range; HUL, Asian Paints, Nestle, Bajaj Finance, Titan, Britannia; all are trading above 10year PE.
  • Switch funds from Dividend paying schemes to Growth.

Picture Credit:

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.

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