We are in interesting times from a Macro Economics point of view. Covid panic led to stimulus, stimulus created inflation, higher inflation means higher rates.

  In India INR in trouble after relief rally last month, G.Sec touched 7.44 couple of days back. So short INR and long IGB trade is back. Fed rate hike and rising dollar are main culprits.

RBI's market operations & forex interventions have reduced system liquidity.

  We think RBI set to rise Repo rate by 50 bps in their MPC meet on 30^th Sept as inflation is higher band and above RBI’s tolerance level.

  In coming months G- Sec will touch 8% - 8.5% that would be a great opportunity to lock your money. In last 15 years, only thrice we got this opportunity. (2008, 2013, 2018)

  Opening up china’s economy, Winter and Russia Ukraine war means crude oil will again. Move toward 100 - 100+ levels in coming months.

TAKE AWAYS

•   If you are not a seasoned trader, stay away from direct equity trading  particularly penny stocks, small and mid-cap stocks. Easy money phase from the equity market is over. If someone promises you 3% - 5% pm from equity trading, don’t trust him.
•   Give your money to professionals. Like MF managers, after all peace of mind is important.
•   Next one or two years, we are going to be in an accumulation phase. Increase your SIP or put Lump sum. (In drawdowns).
•  Professional and Experience Advisor can add value to your investments as well as guide you according to your goals.
•  Higher rates are here to stay for longer so prepare yourself.
• Check your Debt – Equity ratio Do proper asset allocation (Debt –Equity- Gold)

      RBI’S policy announcement on 5^th Aug will decide trend for both equity and debt market. We expect RBI to increase Repo Rate 35 BPS to 50 BPS.Repo Rate may peak in Feb 23 at 6%. Looking at macro indicators, Current situation looks fine but it all depends on crude oil prices. If crude oil prices start increasing this winter. (Mind you even after Fed’s aggressing rate hike, unlike other commodities crude oil not corrected much). Then our fisc and CAD will affect negatively. We cannot afford to have High CAD deficit. On rupee front RBI managed it well so far but we believe depreciation of rupee is on the card, otherwise we have to make a lot of internal adjustment.

     In this cycle G sec will settle between 8-8.5(may be) will give good entry point for long term investors. In India for timing guy, gets opportunities. In debt first and then in equities.so we believe debt and equity funds will Do well. Role of advisor is very important in this kind of volatile market.

                                                                                                                                                                                                               Short Note by

                                                                                                                                                                                                               SANTOSH AKERKAR

       Macro Indicators are suggesting a change of Era. We have had a long Goldilocks Era (low inflation and low rates) for the past 20 years where everything’s worked really well. Now inflation is surging high in India as well as around the world. There are many reasons for high inflation, supply side issues, Geopolitical tensions and easy money policies of central banks particularly during pandemic. We feel that central banks will prefer tame.  Inflation over growth:  It means higher interest rates are here to stay. We strongly feel that the peak of inflation is ahead in India rather than behind. RBI’s 6% Inflation target is not rising but will become floor.

    Inflation is harmful for the people who are at the bottom of the pandemic particularly middle class and poor people. 

                                       WHAT’S THE SOLUTION

1.      Learn to live below your means. Track our Income and expenses. Be disciplined about your Investments.

2.      Need to create passive income or cash flow to fight Inflation.

3.     Asset allocation is key.  It's important to stay in both equity and bond and will give great opportunities to invest.

4.     Balanced Advantage funds or Hybrid funds will do well. 

5 Avoid direct stocks investment and trading – losing less is more than earning more. Stay with a mutual fund where experts manage your Investment.