The 20 lakh crore stimulus & investing

New investors are asking is it a good time to invest given that the markets are crashing again? This week on  #KuveraInsights, we find out with Vishal, CEO of IDFC MF & Lisa, founder at MoneyPuzzle.in. We discuss using data your long term SIP returns and how they are affected by when you start investing. The results may surprise you!

 

 

 

 

Prime Minister Narendra Modi announced a stimulus package of Rs 20 lakh crore (USD 260 billion), which includes previously announced liquidity measures. The economic package focuses on tax breaks, financial incentives for domestic manufacturing and MSMEs.

The key highlights include:

  • Rs 3 lakh crore of collateral-free financing to MSMEs
  • Rs 30,000 crore liquidity scheme to invest in the investment-grade debt of NBFCs, HCFCs and MFIs
  • Extending the due date of all income tax returns for the financial year 2019-20 from July 31, 2020, to November 30, 2020
  • Reducing rates of Tax Deduction at Source (TDS) 

 

Our take:

1/ After direct bank transfer that focused on providing immediate relief to the bottom of the pyramid, this round is focused on solving for the cashflow needs of MSME. With that focus, these are the right measures, though one could argue that more could have been done – like an income tax holiday for 3 – 6 months.

2/ Demand destruction is real and deeper than we thought. Next, we would like to see the government stepping up as a buyer of first resort by starting all the infrastructure (new and modernization) projects that have been due for a while. It will be a dual boost – we badly need new infrastructure and we badly need new demand.

3/ As an investor don’t depend on a one-off stimulus for investment returns. If governments could reliably stimulate the economy or the markets, then historic returns would not be as volatile or lumpy. Also, realize that any stimulus today will be funded by our future taxes. It all has to come full circle. So, focus on long term premise of investing and stick with your plan.

 

 

Index Returns

Index 1W 1Y 3Y
NIFTY 50 -1.2% -18.0% -1.1%
NIFTY NEXT 50 1.0% -10.8% -4.9%
S&P BSE SENSEX -1.7% -16.1% 0.9%
S&P BSE SmallCap 0.5% -22.3% -11.9%
S&P BSE MidCap 0.7% -18.4% -8.5%
NASDAQ 100 -0.7% 21.9% 17.1%
S&P 500 -2.3% 0.4% 6.0%

Source: BSE / NSE

 

Top 5 best performing funds

Name 1W 1Y 3Y
UTI Transportation & Logistics 4.5% -24.7% -14.5%
IDBI Gold 2.7% 44.7% 16.8%
Nippon India Consumption 2.6% -6.1% -4.2%
L&T Infrastructure 2.4% -24.7% -9.1%
ABSL Infrastructure 2.1% -27.4% -12.8%

Source: Kuvera.in

 

Top 5 worst performing funds

Name 1W 1Y 3Y
Edelweiss US Value Equity -5.8% -5.4% 3.8%
DSP World Energy -5.3% -22.5% -6.1%
Edelweiss Europe Dynamic -4.7% -8.0% -2.2%
HSBC Brazil -4.4% -40.1% -13.7%
HSBC Managed Solutions -4.3% 0.9% 3.9%

Source: Kuvera.in

 

What Investors Bought

We saw the most inflows in these 5 Funds –

Name 1W 1Y 3Y
Parag Parikh Long Term Equity 1.9% -1.3% 6.7%
Mirae Asset Large Cap -1.1% -14.8% 0.3%
Mirae Asset Emerging Bluechip -0.2% -7.8% 0.8%
Axis Bluechip -1.2% -3.6% 7.7%
UTI Nifty Index -1.2% -17.3% -0.1%

Source: Kuvera.in

 

What Investors Sold

We saw the most outflows in these 5 Funds –

Name 1W 1Y 3Y
SBI Blue Chip -0.7% -15.4% -2.1%
ABSL Regular Saving -0.1% 3.2% 10.7%
SBI Banking & Fin Services -2.1% -25.1% 0.1%
Franklin India Dynamic P E… 0.2% -24.8% -4.4%
ABSL Equity Hybrid 95 -0.4% -15.4% -3.7%

Source: Kuvera.in

 

Most Watchlisted Fund

Top 5 funds added to watchlist by Kuverians

Name 1W 1Y 3Y
Axis Bluechip -1.2% -3.6% 7.7%
Franklin US Opp… -0.5% 21.8% 20.6%
Parag Parikh Long Term Equity 1.9% -1.3% 6.7%
Axis Long Term Equity -0.6% -6.0% 4.1%
SBI Gold 1.1% 45.4% 18.3%

Source: Kuvera.in

 

Top ELSS funds

Name 1W 1Y 3Y
Parag Parikh Tax Saver 2.8% NA NA
ITI Long Term Equity 1.1% NA NA
Nippon India Tax Saver 0.6% -27.2% -12.1%
ICICI Pru Long Term Equity 0.5% -18.1% -2.4%
JM Tax Gain 0.4% -14.9% -2.2%

Source: Kuvera.in

 

 

Movers & Shakers

1/ Aditya Birla Sun Life Mutual Fund has announced that Jayesh Gandhi and Vineet Maloo cease to be fund managers of its schemes. The AMC has changed fund management responsibilities for the relevant schemes.

2/ Mahindra Mutual Fund has appointed Vijay Seshadri Ramachandran as an Independent Director and Gianni Racco as an Associate Director on the Board of Mahindra Asset Management Company Private Limited.

3/ Indiabulls Mutual Fund has announced that Veekesh Gandhi ceases to be co-fund manager of its schemes. The AMC has changed fund management responsibilities for the relevant schemes.

 

Quote of the week:

 

 

One of the frustrating things for people who miss the first rally in a bull market is that they wait for the big correction and it never comes. The market just keeps climbing and climbing. It feeds on itself in frenzied fashion and propels prices considerably higher for six months or so, and sometimes longer.

: Martin Zweig

 

 

Interested in how we think about the markets?

Read more: Zen And The Art Of Investing

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