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Business News/ Opinion / Ignore noise; stay with long-term goals
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Ignore noise; stay with long-term goals

We are at an inflection point with respect to retail flows in debt mutual funds, and dynamic bonds and long duration bonds

Photo by: Aniruddha Chowdhury/MintPremium
Photo by: Aniruddha Chowdhury/Mint

The government has stuck to policies that are prudent and long term and continued its stance to consolidate its fiscal deficit. Fiscal deficit for FY18 has been pegged at 3.2% of gross domestic product and 3.0% for FY19. The net borrowing in this fiscal year is projected at Rs3.48 trillion. These are positives for the bond markets and will help interest rates to move lower in the second half of this year. We are at an inflection point with respect to retail flows in debt mutual funds, and dynamic bonds and long duration bonds can be good investment avenues for retail investors with a 3-year time horizon. To ensure that senior citizens can get good returns in a falling interest rate regime, the finance minister announced that LIC will implement a scheme for senior citizens to provide assured pension, with a guaranteed return of 8% per annum for 10 years, which is a positive. The disinvestment target for the next year is steep, which means we will see more initial public offers and follow-on public offers for retail investors. The finance minister also stated (considering the success of the recent CPSE ETF) that the government is proposing another ETF. Shares of railway public sector enterprises such as IRCTC, IRFC and IRCON will be listed on stock exchanges. There were no negative surprises on LTCG for equities and equity funds. Every year when the budget is presented, there are hopes and fears of the changes one needs to make in their investment and savings portfolio to get tax benefits. In this budget there has been no change in any policy decision that would affect the investment process of a retail investor. What is clear from the policy decisions made by the government in the past couple of years is that, it would like to move the Indian economy from being a cash economy to digital economy. Our advice to investors is that it is best to stay focused on their goals and not be perturbed by market noise. The achievement of long-term goals is what the retail investors should endeavour to achieve.

Swarup Mohanty is the chief executive officer of Mirae Asset Global Investments (India) Pvt. Ltd.

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Published: 01 Feb 2017, 07:50 PM IST
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