Mutual Fund Recommendations!

EQUITIES:

Following major events are expected to have positive impact on markets –

a. India’s economy expanded 5.7% in June Qtr, its fastest pace in more than two years and it was higher than the consensus figure of 5.4%.
b. PM is on a five day visit to Japan and some big announcements can be expected during this period that would be positive for the markets
c. Supreme court is going to decide on fate of companies who were allocated coal blocks on 1st September and a favorable decision would cause a strong comeback rally in stocks of these companies

The major highlights of GDP data that came on Friday are given below –

• Manufacturing, agriculture, and construction sectors have picked up growth, all are key sectors for economy and employment
• Capital formation increased by 7% against 2.8% contraction same qtr last year, an important sign of investment recovery
• Private consumption rose by 5.6% indicating pickup in demand and better consumer sentiment 
• With exports registering a growth of 11.5% along with the measures taken by the government the economy can be expected to show further improvement in the remaining part of the year
• Investment in industry is expected to increase further over next few quarters as government is speeding up starting of stalled projects and supply constraints are coming down. Action on land and labor reforms will be additional boosters. Government’s focus on promoting a single-window clearance for projects and emphasis on ‘ease of doing business’ will also promote investments.

In order to convert this first sign of revival in Indian economy, the government should continue its reform agenda which would restart the investment cycle and revive economy.

Global concerns have not seen any further deterioration. Our views remain the same and we recommend to stay invested in equities.

• Nifty has come out of the range of 7550-7850. It may cross 8000 if it remains above 7850. (See today’s Special Report for details)

Midcap and infrastructure funds are still available at attractive valuations offering a good investing opportunity for long-term investors.

STRATEGY:

• New investors should invest in good schemes at dips and existing investors should hold. Many small caps and infra funds have fallen sharply and some still offer good opportunity to buy at low.

DEBT

We hold our view that bond markets and long tenor debt will perform well in the long run. 

• There are several positive factors as mentioned in the beginning.
• Inflation in long run is expected to come down.
• Long term funds will rise in value when interest rates fall in long run. Improving economy will attract more FII investments in bonds, raising their demand and prices.

STRATEGY:

• We recommend again that depending upon risk profile of investor – invest in longer maturity debt funds for better returns

GOLD

Even after a spate of global negative news, gold price has failed to break above 28800. In long run gold is in bearish trend and one should not expect any significant real return (returns above the inflation) from it. Only if gold closes above 28800 decisively, we would review our view on Gold.

We hold our earlier view on gold and recommend switch from gold and gold ETF to equity as current scenario offers a good opportunity to exit at higher prices.

Resource:- https://www.linkedin.com/today/post/article/20140830113831-247646391-mutual-fund-recommendations