Yesterday I saw Hawkins cookers offering 10.25% p.a. I like Hawkins – it was a company where I made a first fixed in 1975! Of course it has rewarded us as shareholders…but now I am digressing!

If you are a SIP investor, you should NOT READ THIS POST. A view on the Macro is completely useless. I belong to the Peter Lynch school of thought that if you spent 10 minutes on the economy, you have wasted 7 minutes.

However, about 5 months ago I was talking to a good fund manager. He was concerned about

a) quantum of FII debt investments – whether new money will come or whether the existing huge surplus would flow out

b) the interest rates in the US

c) the demand for money in the US

d) the above 3 pushing the $ higher

e) the above 4 in tandem with a increase in demand increasing the crude prices

well, almost everything has happened. More importantly all our Macro indicators have gone down. Now if Hawkins is paying 10.25% interest, and gilt is at 8% (say) it means many companies will now be in the 9.5% bracket. So the next good NCD issue will come at 10.5%p.a. – and frankly that will NOT be a bad number to lock-in about 30% of your debt portfolio AT LEAST.

It is a good time to see your poor returns in Nps G-sec. I doubt if it would be more than 4% p,a. I have no clue who will hold their hand and explain that they have NOT lost money, and it is just a temporary dip. However when interest rates go up and money gets harder to get the risk in the corporate portfolio goes up. Ouch, NPS corporate debt portfolio is going to hurt. Hurt badly that too.

So if you are a stock picker expect some slow down (if not a fall) in the finance sector. In fact partial booking of profits should not be a bad thing to do if you are seeing interest rates going up.

Waiting a little time to load up on asset management companies or life insurance companies may be good strategy, but remember nothing of macro works when the number of shares traded is very small or when the market capitalisation is not high.

Good luck.

Ps: I was always bearish on the Macro signals. I was sure that crude $40, and US$65 were nice but not sustainable. I advised people to keep money in US$ if they had 2 /3 college fees committment. I hope they listened to me. Even investors in US Opportunities funds or even in the Index funds got saved by the $ move.

Caveat: Most of this is perhaps priced in. Please do not look for tips.