On international front, US economy continues to do well and the QE program has been wind down completely from the month of Oct14. Expectation of rate hike in US in 2HCY15, as indicated in recent FED meeting minutes is leading to strengthening of US Dollar against all major currencies. On stimulus front, Japan and Europe has decided to expand their balance sheet and hence liquidity will continue to chase high yielding asset across the World. Tensions in ME and war-torn areas have eased, although risk of flaring of it again persists in short to medium term.
On domestic front, the street will keenly follow the winter session of Parliament, which is likely to start from 24th Nov14. Total 39 bills are expected to come for clearance. Key bills are Insurance, GST and Coal Mines Special Provision Ordinance. The coal ordinance allows companies that had their coal block allocations for captive use cancelled recently by the Supreme Court to bid for the mines, barring entities convicted of offences related to the allotment.
Overall, India is in sweet spot amongst emerging markets and the strategy to follow is “Buy on Dips”. Investors should take stock specific approach with 2-3 yr perspectives and should buy stocks in Pvt Bank, NBFCs (Housing Finance, Insurance), Oil and Gas, Auto, Infrastructure, Cement etc. which are likely to be the key beneficiaries going forward.