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Best Investment Strategy in Current Stock Market volatility, Also find out is SIP the best tool for investment in current scenario

12
Sep

Dear All,

Please find a note below on current market volatility and what can be done as an individual investor in current scenario.
I am addressing some common questions which every investor has in his mind in current scenario.

Que 1 : Can markets fall further, experts say India’s fundamentals are strong it will not fall, what should we do?
Ans : The answer is no one knows it may go up or it may go down :-),
but if country like China is falling which contributes 13% to world’s GDP next to United States, its time to be cautious.
{Please check excel sheet attached (world bank data) GDP growth country wise }

World GDP PreviewGrid

Hence if it goes down mutual fund investors who are doing SIP are the biggest beneficiary of accumulating more units at lower levels.
Those who are still sitting on the sidelines to invest, this is a good opportunity to start, reason been what happened in 2008,
SIP Investors made good money, see details below :

As it happened between Jan 2008 to Oct 2010, investors who started SIP at the peak of market fall and continued till
market reaching same level, got an average return of 29.21% for reference please see chart attached from 2008 till 2010,
and actual returns from a diversified fund Birla Sunlife top 100 fund growth

Hence if it goes down mutual fund investors who are doing SIP are the biggest beneficiary of accumulating more units at lower levels.
Those who are still sitting on the sidelines to invest, this is a good opportunity to start, reason been what happened in 2008,
SIP Investors made good money, see details below :

As it happened between Jan 2008 to Oct 2010, investors who started SIP at the peak of market fall and continued till
market reaching same level, got an average return of 29.21% for reference please see chart attached from 2008 till 2010,
and actual returns from a diversified fund Birla Sunlife top 100 fund growth

Nifty - 2008-2010

Please note : Don’t do lump sum investment which we never suggest to our clients reason is, imagine investor who has done a lump sum
investment in 2008 peak, he will have no returns till 2010, where as SIP investor made 29% CAGR return.

Hence plan your tax saving investment also in advance by bifurcating in equal installments,
year end lump sum investment is not suggested.

Que 2 : Many investors are getting lured towards Real estate funds and infrastructure funds as they have fallen a lot, you often see
stock market Guru’s talking about India’s Infrastructure growth and opportunity and there by suggesting these stocks and mutual funds ?

Ans : Please consider points below why its not advisable to invest in infrastructure fund or real estate fund

1. Thin Profit Margin and
Net margin of infrastructure companies are between 4% to 7%,
2. Competitive bidding
Projects are allotted through competitive bidding where each company tries to quote lower to get the project
and there by compromising on margins

3. Long gestation period
Projects years to complete there by making them vulnerable to losses in future in case any of their projections
go wrong while implementing the project

4. The only beneficiary in infrastructure space is cement sector, healthy margins and basic component for any project
to be implemented.

With good capacity available with cement companies to ramp-up production in case of any increase in demand
without increase in capital expenditure to increase the production

(Please refer real estate index and infra index attached in sector analysis chart)
Ignorance may be bliss, but it certainly is not freedom, except in the minds of those who prefer darkness to light and chains to liberty. The more true information we can acquire, the better for our enfranchisement.
ROBERT HUGH BENSON, Intellectual Slavery

Please feel free to share your views or any query feel free to call or mail @ 99167-40560 or niraj@profittantra.com