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Action Plan For Feb-Mar 2009

Most of us today are seeking answer to just one question: When will Sensex bounce back? Answers like second half of 2009, if not in 2009 then surely in 2010 etc are surely not going to make any difference to our depleted portfolios. Market will take its own time as there are several factors to it which are a bit difficult to predict accurately like reversal of economies & liquidity flowing back from FIIs.

I think we all should ignore the negative returns shown in our existing Equity portfolio for which the break-even may come at 16000 or for some at 15000 or 14000. The smarter thing would be to focus on building a new Equity Funds portfolio between 8500 - 10500 levels & going ahead as market recovers - another sizeable portfolio between 10500 - 12500 levels. These portfolios would provide you with extraordinary returns as markets recover whether in second half of 2009 or in 2010.

SIPs: To start fresh SIPs of a sizeable portion of your monthly savings will prove to be the most prudent strategy. Few investors who have stopped their on-going SIPs in panic recently (seeing the current negative returns) will realize that the decision of not investing now at 8500 - 10500 levels was as big a blunder as investing at 20,000. If you have stopped your SIPs recently, it's not too late - start again immediately. And if you have never had an SIP, this is your best chance to start one.

ELSS: I am extremely happy to see continuous flows in ELSS across the country since Nov'08. Very prudently investors are opting for potentially the most profitable option for their 80C investments for this year. Keep it up!

Market Outlook:
Near term global economic outlook continues to remain weak. Fears of deflation and recession are looming large. Despite huge stimulus packages, global economic recovery could take long
For India, fall in crude oil prices, easing of liquidity and lower interest rates are long term positives
Domestic insurance companies to provide liquidity over the next few months
While short term headwinds prevails, I expect 2009 to be a better year for equities and advice investing through the year to tide over volatility

Conclusion: It's a great buy below 10,500 & a screaming buy between 8500 - 9000. Whether sensex will go down to 8000? Incase if it happens, you can buy more at 8000, but the chances are very less & you should not wait for it as it may not happen at all & you may miss 8500-9000-9500 levels in the wait.

 
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