I would like to bring the below updates to your notice.

Equity Markets:

Equity Markets are in roller coaster ride since last couple of months or so owning to big domestic event and global factors. index touched life time highs in the intraday. Compared to last high registered by nifty in 2018 half of nifty stocks now are below last year highs.

This rally has driven by only couple of index heavyweight stocks.

Inspite of political stability and other macro variables like inflation, fiscal deficit etc are under control the valuations are not in favour. And 2019 is not 2014 in terms of market valuations.

Hence it is prudent one should not go overboard on equities. It is always better to follow asset allocation, invest with discipline and focus on long term rather than short term market noises.

Considering the current market valuations i continue with the same strategy of investing through SIP, STP In multicap funds,lumpsum in asset allocation funds and debt. I’m recommending the same strategy for more than a year and continue to do so in the near future.

Debt Markets:

After the IL&FS issue lot of noise happening around debt markets. Fund raising has become difficult for corporate companies. Rating agencies have become proactive and started downgrading corporate which are over leveraged. Companies like ZEE, ADAG, DHFL group etc. got affected.

It should be noted that a downgrade is not a default. Downgrades and upgrades of corporate paper is a common event which happens on ongoing basis.

The big advantage of a debt mutual fund is the investment amount is spread across more than 40-50 companies.

On a three year holding period it is extremely unlikely to lose money in debt funds which i have been recommending. Moreover considering the tax treatment they able to deliver better returns than an FD, particularly for higher tax bracket. Those who have been investing in it since more than 5 years have seen such instances in the past and still generated better returns.

Keeping in mind the SEBI fund categorization and due to changing circumstances in debt space proactively doing necessary changes in order to manage risk in a better way.

When fear grips in an asset class valuations become attractive. Currently debt is going through such phase. The margin of safety of valuations is much higher in debt than equity.

Do let me know in case of any further information.