Have Patience its not a time to loose confidence...........

Few weeks back there was a strong buzz and positivism about Indian Markets. Everybody said that we are in a bull run which is going to last and it makes sense to invest with the current valuations........For year 2014 Indian Markets appreciated by around 30%, Indian bond yields fell from 8.5 levels to 7.7% thus giving Income Funds a strong MTM double digit gains.

All was fine till volatility peaked up in the markets last couple of weeks. Indian Markets witnessed a bloodbath of over 1000 points.  In year 2015 Indian markets have fallen by around 9%, bond yields have appreciated to 8% levels. This has just dented the confidence of investors.

Huge FII Sell off was the primary reason with some factors behind it as listed below:

-  Implementation of reforms at ground level by government is not adequate leading to dwindling of confidence of FII's..
-  Improvement in US job claims data might just lead Fed to raise rates.
- IPO's in China worth 377 bn USD is attracting FII's sell off from India to China.
-  Rising crude price from $40 to $68 per barrel is worrisome given the fact that India imports 2/3 of its crude requirements.
-  MAT issue with Government over retrospective Taxation..
- Benign Global economy..........
-  Expectation of a weak monsoon and poor agricultural produce.

Well these factors listed above are not comprehensive. Some more points could have been missed. However my point is that if we look from a Trading and Short Term perspective these factors may hold some relevance. FII's looking for a quick buck from Indian market may not be the immediate beneficiaries.

I however believe an Investor with a long term view shall however not miss the bus....let us look at some positive sides of Investment in India.........

- The Existing Government has passed three crucial bills (Coal, Mining and Insurance) in its tenure of last 1 year. I am a politically neutral person but let us understand that Government is not God. In a politically diversified system like India it takes time to implement things in place. The Government has made huge promises and raised the expectation levels of India Inc and the general public as well. Our respected PM Sh Modi has traveled across the globe wherein several announcements for FDI investments were made. Thus implementation at ground level is extremely critical for reforms to happen and the FDI Money to come in. Given the economic and political scenario I believe the Government will deliver over the time to come.                                                                                                                                                                                                                                                            - The last FY budget was applauded across the sectors as it focused more on improving the structural deficiencies rather than announcing the big things. Rail Budget was the biggest case in point.

- Focus on Infrastructure by Government is huge with a huge outlay lined up for Infrastructural development. Substantial funds have been lined up for Roads (14000 cr), Railways (10000 crore), Capex Enhancement of PSU by another 80000 crore.

- Work on GST up and running and is things go well it shall be implemented thus giving a good fillip to improving and rationalizing the uneven Taxation structure across states.

- Inflation has gone down in the last one year with WPI touching the 0 mark. Of course this has been a sticky issue for the Government as well as the RBI. Though RBI has eased the rates this year twice with the expectation of lower inflation, it still remains to be watched out. RBI till now has done a commendable task of taming inflation on the monetary front by using various monetary tools. Despite all pressures it didn't ease the rates till the inflation came down within its comfort zone.

- Global situation although volatile is not on a collapse stage the way it was in 2008. Europe and US have started showing signs on improvement. This may certainly lead to flow of some money in developed markets however India I believe will remain a key portfolio favourite for Foreign investors as the arbitrage between the interest rate and growth differentials will remain for the time to come.

- Indian economic growth had bottomed out in the last few FY's moving down to as low as 4.5%. The scope and expectations of improvement is ample with positive sentiments and projections across the board. India Inc earnings were not very encouraging, Loan growth and capex for companies was muted. This makes a strong case in point for the Government to deliver on the reforms and keep India shining on the International radar.  Indian Markets are currently trading at a PE of 18 times and growth in earnings will translate in a lower PE this improving the valuations.

- Though rising crude and fleeing FII's hit the rupee when it appreciated to $64 mark. We should not ignore the fact the Forex kitty of India has grown to an all time high of $377 bn. Since crude went to an all time low of $48 / barrel due to global factors a correction will certainly stabilize the flow of money in the longer run. A rise and correction in crude will also help counter inflation in India over the longer run as India imports 2/3 of its crude which directly affects the inflation and currency.

With some of the above reasons in place I believe long term investors in Indian market will find value. I am a believer of the fact that some bad news cannot spoil the long term party.

On the Equity side anybody with a 4 - 5 year or longer horizon should see good returns.  For Retail investors SIP remains the best as it averages out the cost. The patience and horizon of investment needs to be there. Panic just makes things worse.

On the debt side the FII sell off has impacted the bonds with yields rising from 7.7 levels to around 8 thus triggering a concern. I expect the volatility to continue before yields move down to provide a good MTM gain. Income Funds especially Dynamic Bond Funds still remain good bet for investors seeking to take debt exposures with a horizon of 2 -3 years. 

The Insensitivity of Bankers.......

Till now I have been writing posts purely on Investment and Financial services. This post although concerned with the Financial services industry is a little different in nature. However with the incidents I have been witnessing on a regular basis since the last 9 years, just prompted express my views through this post.

I have been selling Mutual Funds and Insurance from the last almost 9 years and Banks have been a prominent channel for my dealings. It is a well known fact that Banks are one of the strongest distribution networks for sales of Financial Products. Their reach and advisory capability is well admired and therefore a big chunk of sales for Mutual Funds and Insurance happens through Banks. 

The only sad part of this entire process I feel is the insensitivity of Bankers towards the Team members of Insurance and Mutual Fund companies. I agree to the fact that being a big channel generating huge sale Bank's have all the right to demand best of the services for their customers. And MF & Insurance companies take utmost care to provide their best services to the Bankers and their customers. Being manufacturers (Mutual Funds and Insurers) of products they need to ensure that their distribution channels and customer are well taken care off. But often I come across incidents where I see Team members of the manufacturers often belittled by the Bankers. At times it just looks like somebody in the bank is always waiting to belittle a team member from the manufacturer side. 

It would be trivial to detail the reasons and go into the micro aspects. However it looks very sad when I see a banker shouting, belittling, misbehaving with a person employed with a Mutual Fund or Insurer. Reason could be trivial enough to be conveniently ignored still at times they are blown to the hilt. Mails are sent from Branches to National Heads and CEO's of the manufacturer side just to show the unnecessary importance and muscle. In this whole process many a times the junior and middle management team members are taken to the task and many times without their mistake. 

A lot of times I have seen that instead of finding a solution a blame game starts without a reason. "Your services are poor", "We sell for you and you just enjoy the ready made stuff", "You are good for nothing", "Give me your CEO's mail ID and number", "We at Bank can do this .....that and you cant accommodate such a small request", "Your team doesn't work, change the people at our branch", "Your team member didn't come for the last one week", "Your person didn't come when I called him, what a slow service", "Go sit on the front desk and try convincing customers on your own...", "Don't expect any support from my side.....", "Don't try to teach me ....." ........................................The list of reasons is endless. 

My view is simple on this. Bank's, MF's and Insurance are organizations. Bank's are huge as they play the role of Manufacturers and distributors whereas MF's and Insurers are purely manufacturers. Issues are bound to exist in organizations as all of us are humans, at times we tend to make mistakes and at times we may have difference of opinions or at times we may have various commitments wherein we may not be able to keep everybody happy. 

Given these facts not every person employed in a Bank is rude, harsh and belittles the people from MF's and Insurance. But whosoever does it needs to understand that the person on the other side is also a human being just doing his job and also carries a self respect. Many a times he / she may not be able to retort or reply to the banker for the sheer fact that bank sells his product. He/she can also make mistakes. Agreed that it is not always the Banker who is wrong. The other side may also be wrong. But adopting a rude harsh behavior or belittling somebody just doesn't solve the purpose. The best approach lies in solving the problem rather than making an issue out of it. 

My objective of writing this post is not to blame the Bankers. I have several good friends working in Banks and in my small career I have seen many good and excellent people working in Banks. Many of them have always stood by me and my team and supported us in a big manner to complete the sales targets and resolve issues. With many of them my relationship goes beyond the professional gamut and they are very good friends. I again repeat not all bankers are rude and insensitive. But a chunk of people I have seen in Banks are like that. Through this article I do not intend to show myself as a super human or a saint or a preacher. I am just a human being and through this  post I intend to express my views for those insensitive people in Banks that please look at finding solutions rather than playing blame games and belittling and insulting people employed with MF's and Insurers. As a human being you will feel happier by adopting a soft and solution oriented approach. This is essential to take business and relationship to the next level.