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Wednesday, March 21, 2012

On The Edge

Markets are again headed towards volatilty with the India VIX placed at 21.Post Budget the markets have flattened out to a certain extent and the next trigger is again dependent on RBI cutting rates and the latest inflation figures.

Goldman Sachs report says that this is the best time to buy equities in the US with the treasury yields being what they are.I have held that view(and my previous posts would be a testament to that)since 2008 with the feeling that FIIs would prefer to invest in their home markets where the risks are understood rather than EMs with their political and economic variability.

Yet I get to hear the experts predict a huge flow of liquidity into EMs,especially India.Guess that the Fund Managers belief in US equities is particularly low which has benefited some dodgy balance Sheet firms here.

As a contrarian bet I would invest in Real Estate stocks- DLF,Infrastrucure-maybe an IVRCL and my old reccomendation RCOM that has moved from 75 to 100.It remains a traders market and only those with belief need get in at this time.Pessimism still remains high and that is a good signal.the failure of Nifty to go below 5100-5200 range for now means that any news based fall would be a good time to invest some funds.

Made a short trip to Odisha and the development in Bhubaneswar,Puri,Ganjam and Khurda is amazing.The potential was always there and Bhubaneswar has rapidly become an educational hub in the East.Those with a 4-5 year return horizon can invest in good projects as the prices,especially a little away from the main city,are at a fair level and a 60-70% net return in 5 years would be my conservative estimate.

The Monsoons as an indicator is a few months away.....and for now liquidity,local politics and the RBI hold the key to Indian equities.