Market Update- 22/10/2018

The equity markets continue to show signs of weakness with the index well below it's 200 DMA. We know that 10,000 on the Nifty is an important support with the index testing this in Dec-17 as well as in March 18. It will be interesting to see if the markets test this support again this time around.

The momentum indicators are recovering from the over-sold territory. We can therefore infer that the corrections may not be as sharp as we've seen them the past month. 

The index PE (Sensex) is currently at 21.9. This is still slightly above the long term average of 18.5. While this still calls for caution we are generally more positive (in asset class weightage) on equity than we were these past months. We will increase our asset allocation if there are further downside corrections in the market.

The 10 year G-Sec continues to hover at around 8%. This is a long term resistance and the markets have been testing these levels for some time now. The long term average for the G-Sec is 7.5%. We therefore believe that yields are reasonably high at this point of time. It would be good to add to debt positions.

The USD:INR seems to have found some resistance at around 74. It seems to be settling around the 73 point at the moment. The support for the INR is at 70 (the previous resistance).

The international price for gold continues to hover at around $1200/oz. This reflects a lot of confidence in the global economy.

  

Book Recommendation- Being Mortal - Atul Gawande

Atul Gawande is an American surgeon and writer. He begins this book with a very interesting and important question- 'How long should we go on prolonging life?'. While the subject itself might sound morbid, Atul takes us through real life cases of patients with terminal illness and builds his case very positively and convincingly.

The main theme of his philosophy in tackling this important question is 'autonomy'. He defines autonomy as the ability of a person to live life as per his/her terms. Atul uses live research in support of his thesis. I'm just listing some of his findings (this is from memory and not comprehensive)-

1. We define 'living' as our ability to make choices (however trivial!). We generally prefer to increase our choices rather than reduce them. 

2. We make better decisions when we know and prepare for the worst outcome. More specifically we should not focus decisions only on the best outcome.

3. We need to look at probabilities before taking decisions. 

4. We also need to look at the 'outcomes' of these probabilities. Quite often we find that in the blind pursuit of saving 'life' we get in to outcomes where the patient might actually not have 'much of a life' after treatment.

I found this book very insightful and useful not just from a general life perspective but also in the way I approach Wealth Management and my interactions with my clients and colleagues (both seniors and juniors). I would recommend this book to anyone who's struggling with philosophical questions such as- "What is life?", "What does it mean to live?", "What does it mean to live life well?" and others.