2009…The Recovery Year after a fatal 2008….America has seen what appears to be a Bear Market Rally…so 2010 may see reversals there…..China has seen a doubling in Equity and Real Estate from 2008 lows…early signs of a Bubble forming in years ahead
…..and our Bharat is sandwiched critically between the two…America and China…West and East…clearly 2009 was a great surge back year from October 2008 and March 2009 Lows…but clearly 2010 will not witness a three digit percentage gain from these Sensex levels of 17500…the base is now higher and the macro valuations fairer
….so to beat Index benchmarks and chase alpha,strategy will have to be stock specific with a bigger exposure to low cap and mid cap scrips….thus the risk increases…and thus this strategy may not suit or be appropriate for conservative and even moderate risk profiles….they would best be served by sticking with the Large Caps…Reliance and Larsen
……there is optimism for Indian Equities in 2010 with encouraging GDP and Corporate Earnings Growth rates in the face of high fiscal deficit and food inflation…and the intact Infrastructure and Consumer Story for years to come…..Nothwithstanding any hiccups,the FII Flows and Domestic Insurance and other Institution Flows into Indian equity will continue to be strong in 2010…there is every indication of this..over US $ 10 billion from each stream
…….monies will flow to where returns are more certain and visible and therefore the risk is less….India simply has to be the Investing destination
……I’ve made this equity argument for India repeatedly over the years,so don’t let anyone sway you away from India….as an Indian,you have the right to participate in the returns that this Incredible India story unfolding before you will give you….cautious ,yes,…but cynical and critical and skeptical and you’ll only be grudging those who have participated
……so I reiterate as we close out 2009….Continue to go Long on India Equities for the Long Term…..just look back and contemplate for a second….being fearful,cynical,scared, critical and skeptical held you back from participating in this fantastic recovery in 2009
…believe in the power of Compounding…our government has a Five year Plan…you too have one for Equity…Beginning 2010 to end 2014….Bank Deposits may be safe….. but a compounded 8% annual return will take your Rs 100000 to Rs 146933 in 5 years….post Inflation and tax the real returns would probably be nearer 0 % !