SMFS’ Market Outlook Synopsis & The Path Forward – February 2019

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Market Outlook Synopsis & The Path Forward – February 2019

Since our last review in September 2018, the outlook going forward remains the same. With the budget now behind us, the equity markets will probably remain volatile till the Lok Sabha elections which will be in April-May 2019. The markets will take their short-term directions from the results. But we are still quite positive on the long-term trend.

Thus, we advise continuing with SIPs and STPs in equity funds. Any significant correction would provide an opportunity of putting in lump sum in equity mutual funds.

If we look at the other asset classes-

Gold after 7 years, is now near its last high which was Rs 33,500 per 10 gms in 2012.

Property prices in major cities seem to have bottomed out and are even seeing a marginal uptick.

Debt is now comparatively stable and corporate FDs are giving 8-8.3% rate of interest.

Equity has had a tough last year –

  • Sensex is barely positive by 1.5%.
  • Nifty is negative by 1%.
  • Midcap index is negative 17%.
  • Small cap index is negative by 30%.

But this is the way the equity markets behave; this inherent volatility has to be weathered in the short term and is what actually creates gain in the long term.

Equity still remains an attractive asset class as long as you have an investment horizon of 5-7 years. So please continue with your SIP’s.

Lump sum investments are only recommended in case market corrects by 10-20% from here. Right now, it is better to do a Liquid to Equity, weekly systematic transfer plan over the next 12 months.

But above all, please stick to your asset allocation and do not get swayed by the headlines.

Always remember, correct asset allocation  is the key TOWARDS A SECURE FUTURE.