Posted by:S. G. Raja Sekharan
Friends - If you have invested in equity MF’s - then I guess you would be seeing an erosion of value in the past few months.
Normally in such situation, I would be recommending that you invest more and stay invested as the future is positive for Indian economy and that will have a rub off in the stock markets.
However, I have turned my recommendation over today and I am recommending exiting all your equity MF’s for the time being. The reason is that the next few months look very volatile -the reason is not Indian economy – but the global factors – China is main the reason for this volatility – There is a fair amount of fears of further devaluation of the Yuan - (http://www.marketwatch.com/story/man-who-made-billions-on-housing-crisis-is-betting-against-chinas-yuan-2016-02-03). If the yuan devalues further, it will lead to a domino effect of other countries adjusting their currencies to counter this devaluation and stock markets globally, including India, will be effected.
Here is one more report in ET that you may like to read from a well-known analyst, Saurabh Mukherjee – he is the probably the only Indian analyst who predicted last year that the markets will see this kind of down turn (http://economictimes.indiatimes.com/markets/expert-view/indian-stocks-still-not-cheap-enough-saurabh-mukherjea-ambit-capital/articleshow/50927291.cms).
So I am recommending exiting all the equity MF’s and stay outside the market for the next few months. When the markets stabilise (may happen in one year), it would be better to enter again and at that time, the entry levels will be lower.
I will be watching the markets and will share my recommendations on when to enter again and which funds to buy from time to time and hopefully things will turn out better over time.
In case you have Debt mutual funds - there is no reason to worry -these are safe and you can stay invested.
Please do reach back to me if you have any questions – I would be more than happy to help out.