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CIO's views

CIO's views

Dear Policyholder,

Wishing you and your families a very happy, peaceful and prosperous 2015!! May this be the year when the Indian Economy re-establishes itself on a strong and resilient growth path!

In the past few months, prices of many commodities have fallen significantly. A case in point is crude oil, prices of which have fallen sharply - over 50% from the top in the past six months. The repercussions of the fall in commodity prices, both positive and negative, on the global economy will unfold over the next few months. It seems certain that there will be a drop in global inflation. Euro area inflation could remain negative while in US, UK, and Japan inflation will be only slightly higher. Inflation in Emerging Market economies however may not come off so much, as pass-through would be muted by currency declines and energy policies that slow the pass-through to the retail level. Economic growth indicators in US continue to be positive with the US FED taper seemingly not having a major impact on the economy. Growth in other developed economies like Japan and Euro-area as well as China is tepid, however their respective central banks have helped calm investors time and again. USD appreciation and lower commodity prices are negative for many Emerging Market (EM) equities markets. However, it looks like India will stand out - our economy will benefit from a stable government, growth revival and lower inflation.

In India, inflation numbers surprised positively but growth indicators were mixed. Important legislations could not be taken up in the winter session of Parliament owing to differences between the Government and the Opposition. Subsequently, the Government sought to move ahead by issuing ordinances pertaining to Coal reforms, Insurance bill and Land acquisition bill. RBI indicated a change in its monetary policy stance with a 25bps cut in rates, indicating that it was comfortable with a softening momentum in inflation and inflation expectations even if it is worried on the fiscal front. A downward interest rate should help sustain business sentiment, which would push up private investments and capital expenditure.

India is uniquely positioned in the current global macro construct. Global investors too realize this, and inflows into Indian markets have been strong-USD16.1bn in equities and USD26.2bn in fixed income for CY2014. We expect equity markets to generate good returns over the medium-term as economic growth revives. We believe interest rates are going to head lower in the short-medium term, and RBI has just begun on the easing path.


Mihir Vora
CIO, Max Life Insurance.

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Our aggregate Traditional portfolio witnessed a growth of 34.51%, and overall portfolio grew by 25% over the last one year till June 2014