Investors would be the most confused lot now not knowing what is the way to handle the markets. And their concerns are relevant and reasonable. A fortnight back, when markets touched 5200 levels in Nifty, almost everyone wrote obituary for the Indian equity markets. But the first day of Dr Rajan triggered a swing back in the rupee and the equity markets as well. Then came the surprise from Fed Reserve which held back the bond buying program triggering a huge rise in the emerging markets incl Indian equities.
What should the investors do now?
There is a saying in financial markets, "Loss of Opportunity is better than loss of Capital". It holds good now, as markets are expected to correct further and markets have limited reasons to go up from the current levels. The only possible reason which can push up the markets would be FII flows which can come back strongly after the non decision on Fed tapering. But the economic fundamentals are as weak as ever which was reinforced by RBI's repo rate hike. Inflation continues to frighten the govt and the common man alike and clearly RBI has put inflation control on the priority list.
Federal Reserve's tapering is a question of when and not why, as US economy is going from strength to strength and Indian political scene can get chaotic towards the elections.
The buzzword for the investor should be CAUTION....
- Gopalakrishnan V, Founder & CEO, Money Avenues.
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