Right now! was the title of a popular rock song released three decades ago by popular music band Van Halen. The lyrics of this song propose living for the moment and not being afraid of making a change. In this fortnight’s column, I propose to take you, my valued readers, on a financial market round-up. Right now!
Right now, the RBI continues to display a marked preference for low interest rates. An unwanted fallout of this over the past couple of years has been on retired people dependent on Fixed Deposits (FD). So, are the rates on FDs, which remain the most preferred investment avenue and perceived liquid safe haven for Indian investors, suddenly seeming grossly Inadequate?
Right now, some ‘renowned’ rating agencies and financial institutions are tying themselves into knots trying to predict Gross Domestic Product (GDP) growth in India for the next fiscal and the one after that. Their estimates are as diverse as Indian star cricketer Rohit Sharma’s batting average in India and outside the sub-continent. But, are all these forecasts based on the assumption that the Covid 19 threat would completely fade away by then?
Right now, the Government’s disinvestment target for the fiscal remains ambitious, though no target is ever beyond the realm of possibility. But what are the chances of it being met to support the mathematics of the Budget?
Right Now, given the liquidity sloshing around, Equities are on a roll worldwide, with India being no exception. Market participants of all hues and varieties, including Big Bulls and Bigger Fools (not mutually exclusive always), are straining themselves trying to justify their market biases. So, is a deep correction round the corner or will the indices simply continue to soar? And for how long?
Right now, there are seasoned market participants hedging their equity bets with gold. The price of the precious yellow metal, that had surged during the earlier peak of the pandemic, seems to be losing its froth and is on a downswing. However, if the equity markets were to slip sharply or if a second wave of the pandemic were to visit Indian shores, can there be an immediate turnaround in its fortunes?
Right now, a Mutual Fund House finds itself on the wrong end of a Court ruling, having short-circuited investors across six of their debt schemes where hard earned money was invested. Could the regulator, if it had been more vigilant, circumvented the misery piled on investors?
Right now, private insurance companies find their wings clipped with big ticket Unit Linked Insurance Plans (ULIPs) getting a taxation haircut in the Budget. Would these instruments still merit a look in, though it will be in its new form with a ten year plus time frame coupled with the need to curb their propensity to break and expend their investments? Will the additional insurance cover benefits continue to sweeten the deal?
Right now, stay focused on rebalancing your asset allocation and then, like the lyrics of the song this column has been based on suggests, do not be afraid of change.
Ashok Kumar
Head of LKW-India. He can be reached at ceolotus@hotmail.com