{LONGTERMINVESTORS} Mutual Fund Review - November, 2016

Mutual Fund Review - November, 2016

 

Equity market outlook

 

·         The demonetisation reform measures may have a short-term impact on industries that are mainly dependent on cash transactions. Industries like construction, real estate, hotel businesses, self-owned businesses, bullion & jewellery, mining, etc, are likely to feel the impact of this move. Medium and small businesses that are cash transaction heavy will be hit as well

·         The structural long term benefits to the formal economy will be significant over the medium term in terms of structural improvement in long term growth, lower inflation, lower interest rates due to improved liquidity and improvement in the fiscal position of government. The same along with other structural reform undertaken by the government are likely to provide visibility for durable long term growth

·         Some profit booking pressure may stay in the market in the near term especially given the run up in the markets in the last two or three years

·         Currently, there is heightened uncertainty in terms of near term growth impact that are impacting investor’s sentiments negatively. The global markets are also trading volatile. Therefore, volatility in the Indian markets is likely to remain at elevated levels

·         The next 12-18 months are likely to offer an excellent investment opportunity to long term investors. We believe investors should not get swayed away by the current volatility and recommend starting an SIP or regular investment to benefit from the current weakness in the market

 

Debt market outlook

 

·         The outlook for the debt markets has improved significantly post the announcement of this demonetisation reform. As the banking system is flush with liquidity, system rates across the curve are likely to fall

·         The sharp decline in economic activity across sectors is likely to be disinflationary in nature

·         We believe higher expectations of a rate cut and significant improvement in liquidity bode well for duration funds. Depending on the risk return appetite, investors should increase allocation to duration funds

·         Good quality corporate bond funds also offer good long term investment opportunity as higher accrual and follow up yield correction in line with G-sec yield movement bodes well for corporate bonds

 

For details, click on the link below:

http://content.icicidirect.com/mailimages/ICICIdirect_MonthlyMFReport.pdf

 

Research Desk |ICICIdirect.com|

ICICI Securities Ltd |Akruti Trade Centre, 1st Floor |Road No. 7, MIDC | Andheri (East)| Mumbai 400 093|

Email: research@icicidirect.com|

 

 

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