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Madhusudan Kela – Reliance Mutual Fund, CIO’s message

November 15, 2012

We present to you the view of Madhusudhan Kela, Sr. Fund Manager and Chief Investment / strategist Officer with Reliance Capital Asset Management company on the occasion of Diwali.

Once again, as the biggest and the brightest Hindu festival, Diwali, is upon us, it is indeed a time for introspection, celebration of life and its gifts. [Skippng some Paragraphs Related to Religious References..]

Just think, last Dec, investors had started to write off India story fearing India’s rating downgrades, policy paralysis, early elections, etc. But now, India’s market cap is up by 26% or incremental wealth generation of 13.5 Lakh Cr INR, Indian equities have attracted FII inflows of 18.5 billion US$ and Corporate earnings are also up by 10%. The headwinds which have let the markets and the sentiment down are clearly subsiding at the margin. There is also a clear revival in Government policy actions, and sentiments on the ground have improved.

Furthermore, though the Sensex has remained at the same level in the last 3 years, over one third of the market is at life time highs! If you dwell in the Shradhpakshacan you will fret about the subdued overall market performance, but if you celebrate Diwali with me, you will look at these islands of excellence and see a plethora of exciting opportunities even at this point of time.

As Warren Buffett asserts, “Look at market fluctuations as your friend rather than your enemy; profit from folly rather than participate in it.” I think, if you are optimistic and well positioned you could make money in the market, not if you are pessimistic, unprepared and have lost interest in the markets.

You may be aware that people who have been persistent and positive got disproportionately rewarded in the last 3 glooming years i.e. 35% of the overall market capitalization in India is touching life high. So for me the message of Diwali is that if you positively pursue your financial goal with a resolve, you will come out victorious and grow disproportionately in today’s India.

So here is wishing that this Diwali, you will let that message help your investment decisions.

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