Fund Manager Speaks- September 2014

Market Overview: September 2014


US Federal Reserve announced end of 6 year old Quantitative easing in October but at the same time differed hike in interest rates. European central bank is expected to expand its Quantitative easing to make the fight against deflation more intense.  Bank of Japan has decided to go for large scale bond buying to pull out economy from recession. Now, all of sudden China went for rate cut giving clear acknowledgement of its slowing economy. Only time will tell, how long money pumping can keep the economy floating.  Fall in prices of Coal, Iron ore, Crude oil and Natural gas are further proof of Global slowdown. Overall Global growth is expected to be around 3.3% for FY 15. Thus now the Global fight is against deflation exactly opposite of India. But India, still being predominantly an agrarian economy as compared to the developed nations and highly populated, is better placed in terms of growth potential.


Though Indian economy is also under the shadow of slowdown, with the stable government and with powerful leadership at the Centre, Indian economy is seems to have poised for rapid growth to recover its lost ground. The new government is likely  to ease land acquisition rules, raise foreign investment limits in insurance and pension sector, introduce a country-wide goods and services tax (GST) and a separate labour law for small factories. These all measures along with reduced red tapism should make the business doing easy in India. Invitations to do business in India by Prime Minister Shri Narendra Modi during his recent foreign visits have generated lot of interest amongst industrialist of developed nations. The continued easy money policies of developed nations coupled with low interest rates should encourage investment in India. The government is committed to implement successfully the concept of “Make in India”.

“Modi has Turned India into a Magnet” “If India unleashes, it is going to help not only India but the world’ these are the words of McKinsey Boss, Domnic Barton. This firm is advising its clients to “bet big on India”

Stock market

Despite below expected performance of corporate sector, the Indian stock market scaled new peak on continuous FII & DII flow, falling crude & natural gas, metal & commodity prices globally.  The wholesale and consumer price inflation index have come down at comfortable level which shall permit our central bank to initiate trimming high interest rates. The current account deficit is under control. Every class of investor has become optimistic and convinced about potential of Indian growth story.  The government is committed to implement much awaited reforms in coming winter session.

Industry performance

September quarter corporates sales and operating profit grew 3.2% and 8% respectively over the year ago period. These figures were 10% and 23% in the previous June quarter. But lately the industries are experiencing better flow of orders. Low input cost should benefit a lot to industry in terms of margin expansion.

Industry wise, Pharma, Auto & Auto ancillary including tyre, Agri & agro base industry like fertilizer and crop protection, Cement, Consumer durables and Telecom sector performed well. Performance of FMCG, IT, Textile, Oil and gas sector was satisfactory. Engineering, Metal, Infra, Power, capital Goods were not up to the expectations.


The world is optimistic about India.  India is the most preferred destination amongst all emerging countries. Easy money policy and low interest regime of the developed nations coupled with friendly Pro-investment government policies are sure to attract good amount of long term capital resulting in accelerated growth.

Many investors have turned cautious looking at elevated index level. But if you look at the market without prejudiced mind, we feel, there are ample investment opportunities in the market to generate decent returns.


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