Otto Money Newsletter - 23 Aug 2025

Dear Reader,

Nifty is still below our Jun 27th call of temporary peak at 25,700 and Gold’s international price is near consolidation levels of ~$3300/oz.. While both Gold and Indian equities will do well in the long term, some time correction is warranted. Several renowned fund managers have taken to public platforms to raise their concerns on valuations of Indian equities

GoI is responding and attempting to revive the economic growth. The big macro change since our last newsletter has been the proposed lowering of GST tax slabs. This should boost consumption - especially discretionary consumption. Auto and white good stocks have rebounded as a result. However, GST lowering only shifts the money from government pocket to consumer pockets, GDP multiplier of government capex is higher than that of consumption. Capex related stocks took a backseat as a result of this announcement. You might have heard all this in the financial news.

But what got less coverage was that all is not well in the bond market. India’s 10 year GSec yield has shot up from 6.39% to 6.55%. The bond market is signalling that the fiscal math is tight. The government has to spend more to support industries affected by the Trump Tariffs, the direct tax collection is taking a hit due to higher than anticipated refunds and now indirect taxes will be impacted by lowering of GST on most items. Some relief came in the form of India’s credit rating upgrade by S&P (BBB– to BBB) - this should give the government some room to expand the fiscal deficit and continue to focus on growth.

So how does this impact your portfolio and what action, if any, are warranted? Maintaining some cash is advisable to navigate the uncertainties. If you are invested in our portfolios, fund managers have already created this dry powder - the Medium Risk Equity portfolio has ~12.4% cash+debt currently. Fund managers are deploying the money selectively as individual securities become attractive. If you are a direct stock investor, slow and careful deployment into selective stocks can create a winning portfolio for the future. Seasoned equity investors keep an eye out for bond markets. They understand how interest rates affect asset valuations (interest rate => cost of capital => DCF => Valuation). Just last night, Powell hinted at lowering of interest rates in the US and the markets went up by 1.54% in a day!

That is why interest rates are keenly watched at Wealth Beacon and are included in our market update. Click below to read some of these indicators.

Happy Reading!

Wealth Beacon Team

1. If you haven’t already gotten your portfolio analyzed and streamlined, you may contact us at: contact@wealthbeacon.ai / http://www.wealthbeacon.ai You can always find our previous newsletters here.

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