Money Today Editor-in-Chief Aroon Purie
As MONEY TODAY turns seven, let me at the outset thank you for continuing to repose your faith in us. The past year kept us engaged and engrossed as we brought to you all issues that affected your wallet and told you how to deal with every emerging situation. Be it the rupee's relentless slide against the dollar during the year, the stock market turbulence, the central bank regulations or the new guidelines on health and life insurance products, we have kept you informed and ahead.
Amid all this, we put together some special issues for you. With early signs of recovery in the global markets, our April issue (Investing in India's Global Companies)
offered some investment options among Indian MNCs that could gain from their growing overseas footprint.
When the rupee was hurtling down relentlessly against the dollar, we advised you how to gain from the currency's fall (Riding the Rupee Slide, August 2013).
In our February issue, we tried to untie all the knotty issues related to your salary (Salary Decoded),
while our May issue briefed you in detail on how you can give up the dependence on your salary and become an entrepreneur (Breaking Free).
As we close our seventh anniversary issue, the BSE Sensex is hovering around 20,800, a kissing distance from its all-time high of 21,005. However, the euphoria is missing. These are delicate times. There appears to be a definite disconnect between the levels of benchmark indices and the macroeconomic fundamentals. Growth trends are weak, with the country's industrial production growth (as measured by the Index of Industrial Production) declining to 0.6% in August after registering a 2.8% rise in July. Inflation rose to a seven-month high at 6.46% in September, with food inflation touching 18.4%. The consumer price inflation rose to 9.84% yearon-year in September, its fastest rise in three months, up from 9.52% in August. In view of this, growth push from the central bank by lowering rates seems unlikely. In fact, the likely tightening of the monetary policy can pull the benchmark indices down in the coming days.
There are worries on the global front too. The Federal Reserve (the US central bank) may announce the tapering of the QE (Quantitative Easing) through which it injected liquidity to stabilise the economy after the global financial crisis of 2008-09. Foreign institutional investors, who are already lukewarm towards India, may exit India further on signals of a US revival.
On top of all this, policy decisions are likely go into a limbo when the election season begins. All these make us advice caution on the immediate future. It may be wise to be highly selective in equities, while moving into safer investment options on the fixed-income front, especially with yields from government securities looking quite attractive.
In our cover story, we tell you all the safer options that you can consider. There are many. Equities, of course, will have their own lure. But it is better to wait for a definite direction to emerge, which should come once the uncertainties are behind us. If you are still keen on equities, our story on the market starting on page 36 gives you some investment options in the current market that should whet your risk appetite and yet keep the downside protected.
I wish you a very happy Diwali and hope you have a great year of wealth creation ahead.