MyWay Wealth Weekly Update (Issue #37): All that glitters IS gold and more…

Indian Indices ended the week in red, but gold has lived up to its reputation of being a safe haven asset class and appreciated by 3.10% for the same period.

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#Top2: Reasons for gold regaining sheen

  • The dovish stance from major central banks:

The Federal Open Market Committee (FOMC), the policy-making arm of the U.S. Fed kept rates unchanged in a range of 2.25% to 2.5% on Wednesday even as it signaled that it is ready to cut if data so warrants. Along with the US, the other central banks like Australia, Europe signaled to ease their monetary policies to support economic growth.

  • Gold buying by major central banks:

Global Central Banks, especially of countries having exposure to America’s unexpected policies, seem to be loading up on their gold reserves as a hedge against any major economic headwinds they may face.

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Bottom line:

Gold as an asset class is known to be a natural hedge to economic risks your portfolio may be exposed to. While this short-term gleam in gold prices does not warrant an out and out investment into gold, it sure strengthens the case for a diversified asset allocation into equity, debt, and gold.

It makes sense for investors to hold an indicative ~5%-10% of the total portfolio in gold mutual funds or digital gold to maintain a well-diversified portfolio that will help build a consistent, sustainable and risk-optimal portfolio for the longer term.

MyWay Wealth Weekly Update (Issue #36): Consider this as our gift for your Dad!

Once again, tomorrow is the day we pretend does not exist – albeit unintentionally.

It is the day when the unsung heroes of our life simply look into the mirror and smirk while patting themselves on the back for a job done to the best of abilities.

Tomorrow is Father’s Day.

While we typically reserve this space to demystify and guide you through the most important events in the week, guess there’s nothing wrong in offering it to an event dedicated to the most important person in our lives – Dad!

It is ironic how most of us acknowledge the rigmarole our Dads have gone through yet find it awkward to do anything beyond wishing him a happy Father’s Day! Even if a few of us decide to gift him something, we are caught wondering what could we possibly give to someone who has never asked for anything all his life? Well, the usual love, care & respect does just fine.

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MyWay Wealth Weekly Update (Issue #35): DHFL has defaulted & RBI has cut rates: Is your portfolio safe?

DHFL is the gift that keeps giving – worries around delayed & defaulted payments. It has been months since DHFL has maintained its reputation as an NBFC that can keep lenders on the edge for quite some time. While the DHFL default on interest payment turned the street glum, RBI gifted debt investors a well-appreciated Eidi in the form of a rate cut and change of stance to accommodative.

Game of Loans: Winter is Almost Here!

Earlier this week, CRISIL downgraded DHFL’s commercial papers to ‘D’ (default) as it defaulted on an interest payment due for almost INR 900 crore worth of bonds on 4th June 2019. Per the latest communication received, DHFL has paid out almost INR 350 Cr. of its dues on 7th June 2019. While DHFL seeks to mobilize cash to service its obligations in full during the seven-day grace period, the liquidity situation seems tight. Many mutual funds, along with other investors, have suddenly found themselves in hot water – but we’ve got you covered; read on to know how.

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MyWay Wealth Weekly Update (Issue #34): Nifty at an all-time high; will your portfolio tie? & More

News outlets are abuzz with headlines about Nifty & Sensex being at all-time highs, the street is euphoric, everyone seems to be making money. Meanwhile, are you simply wondering why hasn’t your portfolio reached “all-time highs”?

This edition is to help you decode the mystery behind zooming indices and not-so-zooming portfolios.

Back to Basics

Nifty & Sensex are bellwether indices that reflect the indicative state of capital markets. But, it is important to understand that Nifty is simply a basket of shares of the largest 50 listed companies in India.

To put things in perspective, Indian capital markets have ~4,900 listed stocks and Nifty 50 reflects only 1% of the total universe (and sensex even lower at 30 companies) – that too only shares of the most blue-chip companies in India. So essentially when people say that the indices have sky-rocketed, it is implied that the share prices of only the top 1% of the listed space have increased.

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MyWay Wealth Weekly Update (Issue #33): TsuNaMo 2.0, the road ahead, your game plan & more

TsuNaMo 2.0 swept the elections clean with BJP securing 298 seats to become the single largest party with a complete majority. The nation seems to have caught on the saffron rage over the years – the below exhibit reflects the NDA wave expanding over the years.

TsuNaMo 2.0

But, as quoted by the kid-Avenger Spiderman, “With great power comes great responsibility”. While the nation has conferred power upon the chosen one, it’s time to discuss responsibilities.

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MyWay Wealth Weekly Update (Issue #32): Did you make money while markets lost it? Dark clouds have arrived, but so has the golden lining

The summer of May 2019 brought about a tremendous heatwave in more than one way. While many in India felt the mercury rise up the scale, many spent days watching Indian equities melt – albeit in line with a global sell-off.

With domestic uncertainties around the general elections & monsoon predictions looming large, escalation of trade tensions between US and China seem to be offering no respite even from a global standpoint. Major world indices have been withering since the beginning of this month in anticipation of counter-growth effects of developing geopolitical & trade scenarios.

Global Indices

Investors seem to be cashing out and hopping onto the fences waiting for the haze to clear before resuming the play.

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MyWay Wealth Weekly Update (Issue #31): You must understand this about the US-China Trade War

Global economies & capital are stretched to wit’s end trying to make sense of the evolving US-China trade war situation and even more trying to anticipate effects and quantum of collateral damage.

Uncle Sam pokes the Chinese dragon once again!

Around the same time last week, U.S. President Trump did what he does best – an economic shakedown – this time to its arch nemesis China. The United States communicated its decision to raise import tariffs from 10% to 25% on Chinese goods valued at a significant $200 billion. While this impacts almost 5,700 product categories, the move is also seen as an igniting spark to a trade-war flare.

Such a perception was almost immediately validated by the U.S. increasing the span to more product categories bringing the import value in question to nearly $300 billion.

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MyWay Wealth Weekly Update (Issue #30): Decoding the elections, corporate earnings revival & more

“If you can keep your head when all about you Are losing theirs and blaming it on you,”
“Yours is the Earth and everything that’s in it, And—which is more—you’ll be a Man, my son!” ~Rudyard Kipling (If, 1910)

The above verse is an excerpt from Rudyard Kipling’s collection and often quoted as Warren Buffett’s favourite poem that keeps him going through volatile times.

With many investors getting worried about the upcoming election results and the uncertainty it brings to the Indian political backdrop and consequently in the stock markets, this poem definitely offers some guidance.

Here’s an interesting perspective to how markets have reacted during the pre-election and post-election seasons in the past 38 years (10 General Elections).

Prima facie, one may concur either one of the following:

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MyWay Wealth Weekly Update (Issue #29): A sticky affair: What’s oil economics without crude politics?

“I’m a free trader, the problem with free trade is you need smart people representing you we have the greatest negotiators in the world, but we don’t
use them, we use political hacks and diplomats.”
-Donald Trump (much before the recent sanctions on Iran)

Leaders of major Asian countries woke up to find themselves in deep water as the alleged poster boy for free & fair trade – Donald Trump made a not-so-free-and-fair announcement to cancel all waivers awarded to the sanctions on Iranian oil. While the reason for such an announcement was mentioned as – an attempt to curb terrorism financing; however, the United States’ equivocal stance on Pakistan does not add much credibility to their apparent concerns around terrorism.

Asia contributes to ~35% of the total global demand for oil and is incidentally a key importer of Iranian oil. Within Asia, China and India are the top two importers of the Persian oil.
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MyWay Wealth Weekly Update (Issue #28): Mutual Funds shift gears (& portfolios) this election season and more…

As the election season closed in and the pre-poll month of March’19 presented a rally – largely driven by foreign inflows, mutual fund managers capitalised on the rally to get rid of some slag and re-align portfolios in light of post-election expectations.

Here’s what the portfolio rejigs for the month of March 2019 looked like:

As evident, the industry seems to be loading up on retail consumer-oriented sectors while majorly selling off bulky wholesale business sectors. The above graph illustrates only the top five sectors bought and sold; however, the total value of stocks bought & sold in Mar’19 was INR 2,350 Cr. & INR 1,645 Cr. – net buying of over INR 700 Cr. (more…)