Investor's have a "Left out feeling...."

Stock markets have rebounded 70% to 13,900 levels (25th May) from its recent lows it touched on 9th Mar.’09 (Sensex 8,160), however lot of investor’s have missed on the major rally, including the MFs & HNIs.
Now the serious investor will not like to miss the next up move, but the big question is which way is the market headed now….? Let me give you a quick checklist before touching upon this question …..

What has changed in last few months?
a) Stimulus packages announced few months back seemed to show it tickle down effect.
b) Companies (Read US Bank & Finance Co.’s) have declared positive numbers (albeit with some accounting jugglery).
c) World leader’s has come together to handle this problem of global slow down, as it is effecting the developed nations more then others,
d) Economic growth is bottoming out (atleast falling at lower rates).
e) Business Confidence and Purchase Manager Index is showing sign of revival and confidence.

Back home in India:
a) UPA Govt. is back in power, more stronger then before.
b) RBI has moved Interest rates down and over next few months Banks would be in position to also lower rates further (once the high rate deposits come up for renewal around Sep/Oct’09).
c) Headline Inflation rate is close to zero and expected to remain at lower end for next few months, due to high base effect (WPI had touched double digits in 1st week of Jun’08 and had peaked in Aug’08).

However much more needs to be done on global economic front:
a) Problems created by developed nations cannot be solved overnight.
b) The economic conditions continue to be challenging, un-employment rate in US is inching towards 10% mark,
c) UK as well Japan has shown negative GDP growth for qrt. ended Mar’09.
d) After UK’s AAA stable outlook rating been changed to negative, it seems to be turn of US AAA rating downgrade

Thus all in all, still a mixed data. Markets are expected to remain volatile. For India the near term triggers are:
1. Union Budget
2. Announcement of other key portfolio at the centre
3. Monsoon forecast
4. Oil price movement
5. FII flows

While Investor should remain cautious, they need to continue with discipline investing and remain invested for the core holding. (I continue advocate SIP style of investing).

Markets have run up quite fast and thereby have build in lot of expectation, especially on reforms front. Any negative surprise from budget may not be welcomed.

For the bottom line answer question – Should I enter now or wait? – My view would be that if you want to punt and play short term – you better don’t go long now and if you investment horizon is 4 to 5 years, then you can start getting your feet’s wet now and done wait of the big wave to hit the shore.
Jetha N.Punjabi