Over the last couple of weeks, the markets have been at their volatile best, gaining significantly and then shaving off the gains. Though this has largely been the trend for the last over a year now, the immediate triggers could be the rising crude prices with Brent crude rates hovering above $75 a barrel and the ongoing earnings season. A bigger factor, the Lok Sabha polls is creating uncertainties over the government formation and what happens to the reforms and the development agenda.

Needless to say, this volatility is here to stay, at least for the next few months till a new government settles, crude settles down and confidence returns to the markets.

The volatility has had an immediate impact on the small and mid caps which have become riskier while large caps, with lower returns have held their position. Investors, particularly foreign institutional investors as well as domestic institutional investors are largely watching the Indian market space, as well as what happens in the General Elections and what shape of government comes up before firming up their investments. Till then, volatility will persist and the uncertainties in the market will prevail. Even then, it will depend upon how much attention the new government puts on developmental and reforms issues.

Despite these uncertainties, equities are expected to hold their position and give reasonable returns to investors. In the last five years, equities have always given good returns. The trend is not expected to change now, nor be severely affected by the uncertainties though the volatility may affect margins. Mutual funds unfortunately have not come to the investors’ rescue despite being one of the favourite areas of investment for most investors. Returns have been low and the silver lining is yet to be visible. But despite this, the AUM of mutual funds has been increasing. Other asset classes like gold and real estate are also not promising at the moment.

It may make sense to remain invested as the market is low and can only appreciate from the current levels. The Sensex is already kissing the 39,000 level having crossed it in a day’s trading, this month. People are already eagerly looking at plus 40,000 levels post the elections. That might happen if all goes well.

Retirement brings many emotions along with it for employees. The primary concern for all though is the income flow post retirement. While many government employees are privileged to have pension, private sector employees are not so lucky. Thus, retirement planning assumes importance. Our cover story on retirement planning delves into the many aspects of retirement and how people plan their post retirement life and what is to be done in such circumstances. One surprising revelation was that only two per cent people in India have not prepared or planned their retirement, while an overwhelming 98 per cent have either planned and made investments or are investing into it even though some of them are late starters. We offer tips on what people should do, how much they should invest and when they should start.

What can be good news for private sector employees is that post a Supreme Court ruling, even private sector employees may be entitled to pension arising from their provident fund. While the modalities are yet to be clear, our story looks at the possibilities of this scenario and how it will work out. And finally, with the myth of FMPs being a safe investment better than fixed deposits having been busted, it is clear now that in market related investments nothing can be assured returns despite these debt funds investing primarily in G-Secs and Commercial Papers. Investors have got a rude shock regarding returns to their FMPs. But the saga continues. Keep an eye on our subsequent issues for this.