The time to buy was when there was panic on street at 6,800 and is this now actually time to relook at your portfolio

It is always good to relook at your portfolio and check whether the trade you have put up, is it working in your favour or not. Obviously, the best time to buy rural economy related stock was when it was not announced that monsoon will be good. Those were the times when they were available with desperate valuations. We have seen some of the results from rural sector related companies which have actually come ahead of market expectation, market was fearing worse and they have just come in bad. If the monsoon comes through then obviously those companies could still give decent return from current level. So my guess is that the broad theme which has worked in the market from the lows of March is going to continue as we move into next couple of months also, but it is always good to be bottom up rather than top down in a market like this, which is reasonably valued and where events are now going to shift what will be the price movement of the stock rather than just the momentum of the market.

Views on the DII investment flow: 

I don’t think so that should be a cause of worry. I think the recent DII selling is more of things related to certain taxation aspect, certain profit booking. Today, we have about 98 lakh plus systematic investment plan SIPs coming into equity mutual fund bringing about Rs 2,700 crore plus every month. If we go and meet investors most of them are looking to invest into the market rather than taking their profit out. So my guess is that the current bout of DII selling is more portfolio allocation, some amount of redemptions coming through profit booking and taxation related aspects, but overall there is a flow of about Rs 2,700 crore plus every month coming through SIPs and that tribe is increasing. In FY 2016, we added 25 lakh new SIPs. My guess is that this year also the number should be similar, so I am reasonably confident and positive about the DII flows coming into the equity market over rest of calendar year 2016 as well as FY 2017.

How will the global volatility effect Indian markets?

My guess is that it is difficult to price in global volatility, but if our markets were looking for a catalyst for correction then Bank of Japan event which otherwise would have been non-event for us is able to cause a correction in the market, but if our markets are reasonably valued then the global volatility would not have as much as impact. One thing which investor should be prepared for is to make volatility their friend. Always keep some allocation to invest into the market when such kind of volatility impact markets without any fundamental reason.

Going forward there are many events which could kind of create an impact on us. Fed rate increase, now yesterday if you see the market it was divided whether Fed wanted to increase rates in June or whether it didn’t want to increase rates. There were lot of confusion, but if you see Fed Futures rates which is the traded perception of the market it didn’t change, it remain 1 in 5 possibility of raising the rate in June, which is quite low.

Britain exit, we have never seen anything like this in the past. There are horror stories of Britain exit what can happen to the market. There are guys who are saying that it wouldn’t matter much, but certainly if that’s happen it could have an impact on us. China is something like a Rahu and Ketu on our kundli, their dumping could impact our profitability. Their performance can impact global emerging markets (EM) flows into equity market, so my guess is that as we move forward into the rest of the year global events will impact us positively or negatively. Keep a margin of safety so that you can make volatility your friend rather than get panicked because of this volatility.