This Way You Can Also Make your Portfolio Strong
Your investment portfolio came under strain this year, mainly because of oil prices and rupee headwinds. But things have calmed down a bit.
The signs are clear. Oil is sobering up, with prices coming off a high of $86 per barrel to below $70 now. GST collections are showing promise and the rupee is moving towards some stability.
What’s up next? Market participants have state elections this month and next and general elections in early 2019 clearly in sight. The ever-changing global trade dynamics also remains a wild card.
To be sure, these factors will have a bearing on how your investment looks, going ahead. On top of that, here are six trends that you would do well not to miss. The recent sharp correction in domestic stocks was a fallout of a debt default by IL&FS group companies. While those extreme concerns, according to Tata Mutual Fund, have subsided with some support from banks and RBI, the growth aspirations of NBFCs will get curtailed as capital conservation becomes a priority.
This could lead to some market share consolidation and more importantly gain in pricing power for corporate banks. Besides, there is a growing evidence that the stressed asset pool of corporate lenders has peaked, which means lower loan-loss provisions and higher RoE (return on equity) over the next 12-18 months.
The RBI is reported to have already cancelled close to 400 licences of NBFCs during January-September.
“On the NBFC side, under stress, the stronger business models would be able to strengthen themselves. Stronger business models are those where assets’ duration and liabilities are more or less matched and do not mean a significant increase in borrowing costs.