Massive de-leveraging and credit crunch driven by the US and spreading to Europe has led to widespread selling across asset classes including equities with bigger selling in commodities & real estate. The selling has been aggravated by redemption pressures driven by the fear about economic slowdown and collateral damages seen elsewhere. Globally we have witnessed an increased policy response by various central banks and governments with aim of providing stability to financial markets; notably the credit market and improve the business environment and sustain economic momentum. Closer home, we believe that Indian economy is largely driven by domestic consumption (67% of GDP) and infrastructure creation and is expected to be more resilient than other emerging economies. The economy is expected to do well over medium to long-term as Government & RBI has stepped in with policy response on fiscal and monetary front respectively. In the last quarter we have seen possibly biggest monetary easing in Indian history. The macro economic environment & the growth would be supported by declining commodity prices and peaking out of interest rates would further help on demand. We maintain that it is reasonable to expect India's growth to sustain over a longer period. Equity market valuations have compressed significantly and present a very attractive investment opportunity and equity as an asset class will continue to give better returns than any other asset class in the medium to longer term.

We believe that those investors, who fear the current volatility in the global markets, can benefit by investing in balance scheme which would generate returns in equities but at the same time will have a lower volatility than a normal equity scheme. The debt portion of the fund (30% to 35%) can help reduce the volatility. Also the debt portion while providing income yield also offers potential capital appreciation with a falling interest rates scenario. SIP/STP is the preferred way of investing although at current levels an investor can invest in lumpsum with a horizon of 18-24 months.