Few choices for investors in Samvat 2072(Hindu year beginning Diwali);Equity least preferred

                           Dalal Street lit up for Diwali

For the  Indian stock market , the Hindu calendar Samvat is a landmark event . The new year Samvat 2072 begins today as the country celebrates Diwali , the most important festival for the Hindus . For the business, trade and industry it is an auspicious day as they begin the new year with hope for prosperity , worshipping the Goddess Lakshmi seeking her blessings.

As the economy hopes for better year ahead, on  review, the Samvat 2071 has been rather disappointing with the benchmark losing the most in the last four years , after 2011 when it had nosedived by 18 per cent. Surely, investors lost money in the previous Samvat . So, it is no surprise for the diehard bulls telling investors to stay invested and pump in more money in equity as an asset class. They have been giving examples of how people made a rich bounty of 49 per cent in Maruti Suzuki, 28.7 per cent in Lupin, 17.6 per cent in HDFC Bank and 16.3 per cent in Infosys in the last 12 months.  

They conveniently remain silent on the fact that for every Maruti Suzuki, there is a Vedanta where investors lost a huge 63.7 per cent. For every Lupin, there is a Tata Steel where poor investors lost 52.5 per cent. For every HDFC Bank , there is a Hindalco where the losses were  as much as 46.8 per cent  and likewise there was a painful wealth erosion of over 41 per cent in GAIL and ONGC, as per the data compiled by the Business Standard newspaper.

It was such an annoying thing to hear Chief Investment Officer of a leading asset management firm on CNBC TV 18  say that the investors should not bother what to buy or whether to buy or not, they should simply ask: How much to buy and when to buy, painting such a rosy scenario.

Within 20 minutes, the same guy was speaking on another TV channel . Here he was very particular and said “no, no” as long as investors know what stocks they are buying , there is no problem, they will make money.  At one place, he says investors can go and just buy anything and then he goes to another channel and says, no quality of the stock matters: God save asset under his management. No wonder, the Indian Mutual Funds, supposed to be managed by professional managers have not really performed well and won confidence of the retail investors.

Anyhow, if you ask me how the Samvat 2072 is going to perform?  There are several people who believe it is going to be better than the year gone bye.  Well, you can argue on a relative basis, yes. But then, the stock market cannot be expected to be operating in isolation. As long as there is a vibrant economy, the Sensex would show vibrancy. But if the economy remains subdued, the market cannot beat the trend and be ahead of it always.

At the moment, the economic growth does not seem to be creating much of a confidence thanks to a bad global demand, low consumer confidence in the domestic market, heavy debt on the corporates and Narendra Modi government facing a hostile political environment in Parliament, where it enjoys majority only in the lower house.

Ironically, there are not many choices for the investors – Gold and property also remain subdued while returns on bank fixed deposits are declining. But in such a situation, the investors would generally prefer safety over returns. My sense is, retail investors would generally remain absent for the next few months . In fact, they are difficult to return. And then, this protracted threat  : Will Fed Reserve  raise rate or not? Anyways, investors have few choices- equity is not the preferred one .  

Pic courtesy: BSE