Money or no Money

The market movement perfectly correlates with the oscillation of swings in the park, the factors causing this effect are sometimes the Greece crisis to now the Italy crisis, the US Job figures to Indian IIP data which the government also does not know how to measure. The seems the market has lost its immunity from any kind of cold. Be it Mr. Anna, Kingfisher Airlines default or Greece catching cold, our markets do react. Now here's a trivia, according to some journals I subscribe to, Indian Corporates are sitting on a cool pile of cash i.e. about $96 billion. The PSU's alone are sitting at about$40 billion worth of cash. Everyone has their purse tightened, crying out loud that the interest rates are high, and not spending a penny on investment. Agreed the investment climate of the country is not conducive and infrastructure growth can be compared to tight rope walking, however, retail investor is yet again the only one sitting and wondering that where is his money going. The cost of maintaining lifestyle is going up (need I explain this one - Petrol prices, Vegetable prices, Consumer goods, Loans, Clothes, etc.), however, the benefits of my investments are not going great guns.
If he/she keeps it in the savings account 'it' de-grows (though the freedom of savings bank rate is the step in the right direction, but unless one earns more than 11-12% I don't think there'll be any relief. One the other hand the cost of maintaining a normal house is increasing owing to Inflation.
One cannot dare to step in the market, because once the market crosses 18K mark we think oh darn I missed the bus and once it comes back below 17k within the next week one wonders, should I invest right now or it still will fall further.
This is the same situation as to how much is too much and how little is too little.

Any prudence would aim towards the PPF which rightly is the need of the hour, however, we're not certain that the rates will stay above 8.5% for a long time (as these are linked to government bonds), NCD's or Bond Offerings are a good option but they lack liquidity and any retail investor would not step in this territory.
These are times I would compare to situation of Wall Street in 1974, when everyone knew that the economy is going great guns, however, the market was crashing due to extraneous factors and not due to the fact that the domestic economy was in shambles.
If I take a look at most of the Blue chips, they are trading at a HUGE discount of what they were 52 weeks back, but still I don't want to invest because am afraid what lies ahead. DO we really believe that the biggest bank or the biggest IT company would go belly up.
The panic is widespread because of speculation and people who have their jobs in line unless they show hourly profits (probably exaggerating). It is what a great investor said staying ahead of the herd, but you still are the herd aren't you.
The GDP had been revised to a little above 7% now and the fiscal deficit is pegged at 5.5% for this year (if we are lucky). Do we really think its because of events happening in India, not really. These events are all external, Dollar appreciation (again because of my most hated uncle Mr. Speculator) - thus making my Oil import bill denting in my Dollar receipts and increasing the Current account deficit (this in the wake of dwindling exports due to slowdown in West is not good news). Revenue from taxes has slowed, my Non tax revenue growth given the market condition and the government is not able to divest. Lets stay here for a minute, and I am thankful the market conditions are not right for any stake sales, as I will be looking towards financing my deficits and Operating expenditure through sale of assets (In form of stakes in PSU's). The Airwaves auction has not taken place as the government is not able to decide and no one is willing to form a policy as the wounds from 2G scams loom over their heads (This is probably attributed to internal political events which will come to near equilibrium in near future, they HAVE to form a consensus and get the parliament moving sans dividing any states and towards policy reforms or both parties can be sure to be kicked out in the next election).
Greece and Italy have their own set of problems, which they will eventually solve, there is no way Germany and France will use their Tax Payers money to bail anyone out anymore beyond a certain level. The government has to cut its budgets and deficits, the austerity has to set in, and harshly but truly the generation of today will have to repay for sins of few. The whims and fancies of a few who tried to create a coalition of states thereby upgrading their credit worthiness is the same as giving an 18 year old of today an unlimited credit card and setting him/her free at Harrods.
The USD stands at above Rs. 51 levels and has to and will come down in effect in future as this is where growth is, India has done a better job than many Emerging economies in atleast trying to go for Inclusive growth (I know the Urban rural and poor rich divide, however, it is still a lot better than what China has achieved) Rural economy is booming, Eastern India is growing at a good pace and more importantly agriculture supply and not production is an issue.
Which now brings us to the question of what should the retail investor do at this point in time, I can list out many companies on which if I start investing 5-10k a month over the next one year, I am sure I'll make a cool return (I refrain from any forecasts or figures as I think a few points here and there will not matter). But more important than that is a fact that look for Blue Chips, they are trading at yummy values as of now. Be patient, look for what returns if you'd be invested for about 3-5 years and not the next 3-5 hours. The compounding effect at a rate of just 12% p.a. for the next 5 years which any good Blue chip will give is a staggering 76% (and these are rough estimates). So, be cautious but be prudent, Blue chips other than Financial markets-which will be dented by high interest rates in the short run, are a decent buy.