ithought market wrap – 31/3/2012

The markets closed on March 31, 2011 with the Sensex at 19,445. It closed today at 17,404. The year saw a clear negative return of 10% on the Sensex. Investor sentiment was marked by a heightened aversion to equity. Gold was a clear investor favourite. Of the total liquid savings, Debt took away 88% of investor savings in the calendar year 2011. Equity got a poor 11% of the total savings pie. Clearly, investors chose to remain under- invested in equity. The last three months saw FII’s pump in close to Rs.40,000 crores into Indian equities. Through this period, domestic investors remained persistent sellers.

Somewhere, our own confidence in our country’s economic future is too low. Politics seems to worry domestic investors as policy has gone into a state of limbo. There aren’t going to be any quick fixes. The road to recovery in 2012 will be long and windy. But, the important thing for domestic investors to remember is that there is a road and it heads to a destination which you will like to reach ahead of others. So hitting the road early enough is the smart thing to do.

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