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Fantastic Year of Equity Market just got over. 2017 will be Remembered for Long time for its awesome return . Indian Stock Market has appreciated almost 30% YOY. Most wealth creation indicator Small cap and Mid Cap index has gained by 60% and 48% Respectively. This is also one of the Year where in All month Indices closed In GREEN. Now the question is what is waiting on 2018. Before we come to conclusion Let us look back and find the reason of such wonderful Rally.
We had no confusion about this Bull run and we predicted 10000Nifty long back when nifty was at 8000 and sated our Nifty Target of 10000 at Year End. Many one laughed at us but we were very much sure about the Nifty Run. Needless to say that Today Nifty trading above 10500. After Demonetisation when the Economy got a shocker , Many of us got frightened, saddened and having the biggest fear. Bull Market always starts on this very situation when No one believed the potential and opportunity. What may be the cause or Intention of DEMO , but entire Economy got silent Booster which no one noticed . Money power from unorganised started getting more organised. The evidence is well documented . 2017 FII inflow is just INR 51000Crore, where our own money got invested more than INR 1.16lakh Crore. For the first time, Indian Equity market got decoupled from FII investment and Domestic Investors kept pumping the most awaited Liquidity which fueld the market even when we Lost pace of Growth. We must thank NAMO for keeping market alive by cutting interest in small savings and forced people to pump money in Equity. We written way back that Equity will be the best asset class and that will continue even in coming days. Investing in Equity does not only makes market healthy but other way it boost the Industry sentiment as a whole. We seen huge fresh money injected in the form of IPO and 99% listing done at mouth watering price. This uphold the confidence among investors and every one started following in mass. People who spent most of the time indicating this rally as bubble , now forced to come back and seen taking part at the peak.
2017 has seen how Indians has moved from savings to investing. Number of SIP has grown up significantly along with MF investment is mind-blowing. Mass adopting investment through indirect equity does not indicate the Bubble but a disciplined approach towards investment which We Indian just learnt very fast and that is after DEMO. I agree that most of the investment had come unknowingly about the consequences but nothing to worry when the approach is right and more disciplined . So I would say that , 2017 rally is done based more on Liquidity rather than Fundamental , Now once the Fundamental starts improving, what will the pace!! THINK!
Other than DEMO , we seen another Biggest Reform - GST . The positive effect has not come yet , No doubt the price of commodities will fall very soon and will enhance the purchasing power. Digital Transaction will add more transparency which will be an added flavour. Could we have better Booster than this when Nifty at 8000 and wants to grow higher?. Certainly not. India is one of the largest country with high population. Don't expect to fall in line over night even in few years, But even 50% effect will create miracle. As a investor , we expect every day price will move up but don't have patience and tolerance to see the vast changes, its human nature cannot blame. I aways said that - we are blessed by our huge population and Young age , we don't need any Dynamic Bookish reform to correct our Economy , even one simple right approach and direction can give awesome Growth and make us the leader. So be rest assured that, may be we have seen 10000 Nifty in our life time ( just one correction bringing Nifty bellow 10000 for few days does not put conclusion) . So 2018 will be more furious, stronger and will be remembered for long time in Indian Equity market . It will erase all past Bull image from mind and create a New one which will last for long . Why I am so confident let me Explain.
1. NAMO will go for General election on 2019. Last 3 years we have seen Reforms and Huge GOVT Spending. I will not say those as reforms but correction of our corrupt soul. How many times we seen corporates are keen to settle the Debt on fear to lose the crown! RCOM is one of the biggest example . Off-course we could have seen another making of King Fisher easily. Now Looks at JP Group how they keen to resolve the Debt . Whose money they have enjoyed till? Where was the accountability? What made them to change the stance on repayment over night? Food for thought. Bankruptcy Bill is the biggest contributor of this change where it forced corrupt culture to change and hold accountability. This would have not happened if there is no fear to lose the crown. End of the day no Business man will like to lose their chair and become Employee. Will we say this a reforms? No ,but its a change of corrupt soul. This will force them to channelise each and every penny borrowed from banks on right reason. NPA which we are talking about are the legacy which Banks are carrying since long. I could remember and seen many corrupt businesses who borrowed money only not to pay. Today the credit system becoming more robust , you don't have to stand in long “Q” but just one PAN Number will place your entire credit history infornt to put alarm. This is the power of Digitalisation where transparency comes first than Rest. I sure you all have realised how tough to get a Loan from PSU banks these days, where PSU Banks were the largest booster of financing since many decades. Many of us questions - why TAX Payers money misused , Now this is the answer of better governance and accountability. Its a joke when Business blame Low Growth and policy for their fall ? Do they share incentive for their rise?. So this will make Banks more strong and to avoid further big NPA , if Banks become strong , nothing much required to Give Economy a good Boost.
2.The biggest challenge of NAMO now to generate Employment. PVT sector are sitting ideal , taking benefit of digitalisation in wrong way to overflow their wallet. They have forgotten that the hobbit which they are inculcating is dangerous, they must acknowledge some short of responsibility to built the nation. Cutting man power and reach in the name of digitalisation is some thing which lie digging own grave which will reflect on them very soon for sure. GOVT has limited scope to increase Employment. I am told that yesterday Railway has agreed to fill almost 50% of vacancies in next 12 Months which will add another 50 to 60000 but that is few. PVT Sector shd come forward and start contributing. Govt already decided to Borrow almost INR 50000Crore extra, Prima-facie this will effect the fiscal deficit target but I am happy that GOVT has just not keen to retain the chair but has understood the concern. This will see more investment in those sectors which can create Employment. Don't worry this may take fiscal deficit Number from 3.2 ( Targeted) to 3.5% but don't think Sky will fall . MARKET more will wait to see how The Number is targeted in Next Fiscal. So just don't concentrate or gets excited on some Numbers which few can understand and predict but the actual medium term effect on which Market moves.
Now My Target on Nifty is 17000 . I know again its a Herculean task , But as said very few had 10000 on mind when market did fall after DEMO . My bet again on Liquidity. Just to give a Number, Indian MF Investment is just 12-14% of GDP where as any developed nation has above 90% MF penetration of GDP. If this numbers goes to even 30% , just have a figure of Index n mind. Another assumption is - in Next 5 years India has the potential to become $5Trillion Economy. So the level which I am talking about is just peanuts. Even we may cross the target sated before the time who knows. More over FII selling we are seeing because of Year and and the TAX REFORMS done by US Govt, now this is ridiculous to see all Dollars coming back to US soon only to earn few bucks!! Days are not far when Emerging Markets will start seeing fresh money coming in and India will be one of the best destination. Is there any country where Money can bring above 20% return ? . Indian is fresh , More revamped, stronger and ready to grow at the never seen pace. SO, have trust on our own self and keep investing . Discourage and avoid those who spread some illogical Number and fear . I repeat we just started a strong , disciplined and constructive Bull Run and this will remain not less than 10yrs from now . I could have written more with many complex data which only will create confusion and does not add real value . Lets all other do that and we continue to keep faith on US and remain invested .
Wish you all a Happy and prosperous New year and I Thank all of you for keeping faith on us and for supporting . Wish and Request to continue as it is. We are small and new but always kept trying to add values . We innovated many new things and will keep doing these to make your investment simple and fruitful .
All the Best!!