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A Bullish Out-take on the Indian Economy

A Bullish Out-take on the Indian Economy

Aditya Kumar Singh

The financial markets have been in a flux since the establishment of the ‘Modi’ government in India. Even before Narendra Modi’s investiture as Prime Minister, the markets experienced a sense of renewed energy, with the surging stock markets and increasing influx of cash flows from foreign investors. His proposals in the financial budget such as the SARFAESI act to cover NBFC sector in recovering from Non-Performing Assets, to setting up of a Special Investigation Team panel to bring back black money, has boosted the much needed enthusiasm in the Indian economy as a whole.

The volatility of stocks

[su_pullquote align=”right”]With positive market indicators and a booming economy, everyone wants a piece of this growing pie.[/su_pullquote]

With the interest rates fluctuating around 8.85 to 9.15 per annum, fixed deposits seems to be a safe playing field. However, with inflation hovering at 5 to 6%, the returns are not satisfactory. In such a situation, people are turning to stocks as a lucrative source of making money. With positive market indicators and a booming economy, everyone wants a piece of this growing pie. The downside is that stocks “over-expose” one’s portfolio, making it a risky proposition. Take the example of Suzlon Energy. A management’s decision of allotting fresh stocks on conversion of FCC bonds led to people selling stocks because the issue price was lower than the market price. One thing led to another and its value crashed by 20%. Thus, while stocks may seem as a valuable prospect, they need to be monitored closely and handled cautiously.

Mutual Funds as the middle path

The question that it raises is: Is there a way to make more money with moderate risk? Is there a middle path approach to making money? This is where Mutual Funds come into the picture. Mutual funds are investment corporations that professionally manage the pool of money generated by its investors and give returns, based on their investment tactics. Basically, it makes micromanaging of stocks easier and is a good alternative to low yield from bank savings. There are trained professionals that ensure that the interested parties get the best deal possible.

Since the target of the professionals is to maximize returns with minimum possible risk, they aim at a broad basket of investment opportunities to get you best value for your money.

New Portfolio Investment

One of the Mutual Fund products is New India Portfolio (NIP) from FundsIndia.  It is an online investment platform that has won several laurels from the likes of Economic Times & CNBC-TV18. With its carefully chosen basket of 4 mutual fund products, the NIP has managed to return more than 100%* of the initial investment, if one invested back in March 2010. To give some perspective, an annual interest of 10% in banks requires roughly 7 years for doubling the investment amount. However, with Mutual Funds, one can now achieve the same returns in 5 years; a very lucrative return considering the sluggish economic condition throughout 2013 and 2014.

Now, with the Modi government promoting initiatives like Make-in-India, that present attractive opportunities to the industrial powerhouses and encourage them to expand, the outcome of NIP seems obvious! There does not seem a better time to ensure rewarding returns on one’s hard earned money.

Mutual fund investments are subject to market risks. Please read the scheme information and other related documents carefully before investing. Past performance is not indicative of future returns. Please consider your specific investment requirements before choosing a fund, or designing a portfolio that suits your needs.

*Results generated from back testing.

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