Week Ending 4 December 2015

Dear Patrons, welcome to the weekly analysis of the Equity Markets. The week gone by has been very volatile. The markets saw wild moves on both sides due to both, local and global events.

Nifty lost almost 160 points or 2% over this week due to global pressure. The week however started on a positive note, on account of the GDP numbers. India's GDP grew by 7.4% last quarter against an expectation of 7%. This resulted into some up move in the Nifty and it touched a high of 7980 this week.

Then came the statement from the FOMC chairperson, and ECB action. We will see one by one.

The Federal Reserve Chairperson indicated that the data is supportive for the Central Banks bid to increase interest rates this month. The final decision on a rate hike is likely to be taken on the 16th December.

The ECB Chief on the other hand cut deposit rates by 10 basis points and made it costlier to deposit money in banks in the EU. He also indicated that the bond buying program will last till March 2017, at the least.

These two events spooked the markets world over, we saw sharp reaction to ECB action in European Markets and almost equally sharp reaction to FOMC statement in the US.

Back home, INR depreciated against the USD, which widened the selling on our bourses. We have been mentioning in this blog for a long time that any increase in Interest Rates in the US will result in to strengthening of the USD, which, in turn will result in out flow of money from our markets. This out flow will be due to sentimental issues and as stated previously the neat RBI policy should help the INR hold its ground.

What do we do?

The time is tricky to say the least. We need to extremely cautious in the markets. We had said earlier that worst case scenario is 7700 on Nifty, however, in the current trend 7700 may not hold and we may see bigger downside. On the weekly charts, Nifty still shows Negative signs and a deep cut is not ruled out.

One needs to be very selective in investing. Accumulation would augur well for investors than buying at one go.

Happy Investing!!!!!!

Week Ending 27 November 2015

Dear Patrons, welcome to the weekly analysis of the stock markets. At the start let me apologize for not writing this blog for last two weeks. Let us do some catching up. 

In the last blog, we had mentioned about positive outcome of Bihar elections and market moving up and 7700 on Nifty to be the worst case scenario. We were proved wrong on the Bihar election results front, but bang on on Nifty front. Nifty touched a low of around 7710 in the aftermath of Bihar results and currently stand at 7942, gaining more than 3%.

The markets have remained range bound over the last two quarters and our focus has been very stock specific. We had mentioned to buy the ABC in the markets. Namely Automobile, Banking and Cement companies. Automobiles have performed exceedingly well since we mentioned. Banks have been under the hammer for quite some time now, and we believe this is the right time to buy good quality PSU and Private banks.

In other news, there is a good news in store as far as Governance is concerned, for the first time in last 10 years India is a Fiscal Surplus economy. The little steps that the current Government has taken for fiscal consolidation has started yielding fruits, there is long way to go though.

Where do we go from here?

Currently Nifty is trading around 7950. We believe it has the strength to move upwards to 8000-8050, with resistance around 8030. 8030 is the level to be watched and we expect selling to resume around that level. December may as well turn out to be a negative month for the markets. There is a twist to it though, FIIs will be on holidays for Christmas. FIIs have been heavy sellers during the last two quarters and their absence may be a welcome thing for the markets.

However, we will take a call on the markets as it comes. The mantra remains the same saty invested in good quality stocks.

Happy Investing!!!

Week Ending 6 November 2015

Dear patrons, welcome to weekly analysis of the week gone by. On the onset "Wishes for a Happy, Healthy and prosperous Deepawali" to you. May this Deepawali bring lots of Joy, Wisdom and Prosperity to you.

Coming to the markets, Nifty saw a lack luster week. It lost around 1% from the previous week, but the movement was very dull and stock centric. What we saw during the week was lightening of positions. The markets opened higher on a couple of occasions but failed to sustain the gains and lost ground on back of profit booking on account of Bihar election results.

Bihar Election results played the spoilsport during last week, as investors awaited the outcome before taking any risk in the market. In the likely outcome of the NDA forming government in Bihar, we may see smart up move in the markets, if however the results are against the NDA, we may see a knee jerk reaction and stability thereafter. The markets were jittery due to Bihar is evident from the following chart. Indian Equities were worst performing among asian peers and most of the blame goes to Elections in Bihar.

What should we do in this market?

As always, the mantra remains same. Select good quality stocks and Stay Invested. 

As suggested in the last blog Nifty managed to float above 7950 for the week, although it broke 7950, it closed above the level. We believe, with a positive outcome in Bihar and negative data in the US, Nifty should start moving up from Monday. The worst case scenario on Nifty is 7700 levels. However, we would also like to be cautious on the markets for some more time as far as trading is concerned.

Happy Investing!

Week Ending 30th October 2015

An investor without investment objectives is like a traveler without a destination ~ Ralph Seger

Dear Patrons, the above statement is profound considering the way in which trading is done on the Indian equity markets. One must define goals and the the means to achieve those, especially in financial matters. Just like we have a family physician, we should have a family financial consultant, who can guide us in times of distress and make the most out of available resources.

Lets now look at what transpired in the last week.

The roller coaster ride on the bourses continued for the week gone by as well. Nifty shed around 3% in this week to close below 8100. Substantial part of this fall can be attributed to profit booking and global pressure.

The US FOMC was in the News again last week. The FMOC maintained a status-quo in the Interest rates and expressed certainty in rise in interest rate in December. Though it also clarified that increase in the rates will be done only after suitability of data.

The statements by FOMC sparked a rally in the US and increase in USD strength. The USD gained handsomely against all currencies including the INR. As we have been mentioning in this blog, the increase in Interest Rates in the US will spark a rally in USD against the INR which may lead to certain degree of sell off in the Indian equity markets.

The rally in USD also sparked up move in the commodities, with crude gaining almost 6% in one trading session and Gold prices also moved northwards.

China on the other hand cut interest rates for the 6th times in last one year to boost its economic growth. BoJ also maintained interest rates but reduced growth forecast.

We had stated very clearly at the start of this month, that, being results season, we will see stock specific action and not much would happen on index side. 

The results season is almost over now. We believe the month of November to be good for the Indian markets. The current fall should get arrested around 7950-8000 levels. 

As always, mantra remains the same, stay invested.

Happy Investing!

P.S.: Rating agency Moodys has apparently warned the PM to reign in members of his party or lose credibility. To me its absolutely uncalled for, on the part of Moodys to comment on internal matters of India. Their focus should only be on the economic decisions that the GoI takes. Disappointing to put it mildly.

Week Ending 23 October 2015

Dear patrons, welcome to the weekly analysis of the equity markets. We had a truncated week, owing to holiday on the occasion of Vijayadashami. Next fortnight marks the biggest festivities in India and the markets are likely to soak in the festive mood.

On the last trading day Nifty managed to cross 8300 but failed to sustain above and closed a tad below 8300. As suggested in previous blogs the action remained stock specific and News driven, due to results season.

The rally this Friday was on account of sharp rise in the Indices on the Wall Street and Europe. Dow Jones jumped nearly 2% on Thursday on the back of better than expected earnings. European Indices also saw major traction as ECB held the rates and also talked about a fresh stimulus for EU economy.

The News of a fresh stimulus by the ECB resulted in INR strengthening against the USD. INR gained handsomely in opening trade on Friday.

As we have been suggesting in this blog for last 2 weeks, the Nifty moved in a narrow range to end  the week around 8300. The range for Nifty has now shifted to 8050-8550. We do not expect much volatility in the coming week, though its the expiry week. We expect expiry to be in the range of 8100-8300.

Once again, we should see a range bound movement in the indices and scrip specific action to continue for the next week.

Stay invested in good quality stocks.

Happy Investing!

Week Ending 16 October2015

The week gone by has been a mixed bag. The Nifty saw a see-saw movement throughout the week and finally, on the last trading day, saw handsome gains to close above 8200.

As was mentioned in the last blog, the results season has begun and action is more stock specific than Index specific. Infosys & TCS were hammered for their guidance even after decent set of numbers. We believe the guidance for IT companies to remain muted on the back of strengthening INR. This however does not affect the stock performance over the long run. Both these IT giants remain in our favorable list.

RIL came out with its best performance in recent years. We believe RIL must be part of every portfolio just for the amount of cash it has at its disposal.

The week gone by also saw IIP & CPI along with WPI data announced. All three indicators had a positive surprise for the markets. IIP rose more than expected and Price Indices moved southwards.

What does this mean?

In layman's terminology I'd like to call these times as "Acchhe Din". The steps taken by the GoI in fiscal consolidation and discipline along with steps to improve ease of doing business have started bearing fruits, slowly, but surely.

This is the start of a very big movement in the Indian Economy and the Indian Markets. One should be a part of this movement and gain out of it.

Where do we go from here?

As was predicted in this blog, 8200 proved to be a very crucial barrier for the Nifty to cross. Now that Nifty has crossed that barrier, if it sustains above, we should be headed towards 8500.

We had also recommended to buy the A B C in the markets in our 18 September blog. A B C stood for Autos, Banks & Cements respectively. And we have seen that Autos and Cements gained handsomely over the last week and Banks started gaining from 16 October. We expect the further upside in Nifty will be lead by Banks.

The Mantra remains the same. Buy good quality stocks and stay invested. 

Happy Investing!!!!

P.S. Wish you a very happy Navratri and a Joyous and Prosperous Vijayadashami

Week Ending 9 October 2015

Hello patrons! Let me begin today's blog with a quote by Mark Twain on the Stock Markets.

"OCTOBER: This is one of the peculiarly dangerous months to speculate in stocks in. The other are July, January, September, April, November, May, March, June, December, August, and February."

Speculation leads to bad memories of stocks. We have been proponents of investments through this blog and will continue to suggest only investments and not speculation.

After a fabulous Monetary Policy by the RBI, the mood in the markets was exuberant. In this blog we had clearly stated that we are headed towards 8200 on the Nifty. And 8200 did arrive, albeit on the last trading day of the week, but it arrived alright. What lead to this rally?

There are two factors which led to the rally. 

1. As stated in the last blog the Monetary Policy seems to have had an effect on the behavior of the INR against the USD, as was suggested by us. The INR gained almost 2% in last week. The strength in the INR is a welcome sign for the equities and further rally in the INR can't be ruled out. We expect the INR to be around 64 in coming days, which should fuel further up move in the equity markets.

2. The US jobs data last week was below expectations, which led the global investors to believe that the FOMC will hold the increase in interest rates at least till the calendar year end. This sparked a global rally, of which we were also a part.

Where do we go from here?

The result season has begun with Indusind Bank today. We believe this month would be a month of consolidation and stock specific action.

The mantra remains the same. Invest in good quality stocks in every dip and stay invested.

Happy Investing!

Week Ending 1 October 2015

The week gone by has again been a very volatile one, although it ended in the green on a week on week basis. RBI announced its monetary policy on 29 September. The RBI Governor had a surprise in store for the markets in the form of a 50 bps cut in interest rates. The Markets cheered the rate cut buy turning from close to -100 points to +100 points on the Nifty.

This move, of reducing the interest rates, was largely anticipated in this blog. We had given the reasoning behind the logic also, and have been proven right on that aspect. We rate this policy as one of the smartest in recent times. Lets see why it was one of the smartest.

1. Repo rate was cut by 50 bps to the lowest in last 4.5 years. This will increase liquidity in the system and financing for projects will pick up pace.

2. Domestic economic recovery is underway and this rate cut will boost the recovery to a great extent.

3. Slower global growth likely to take toll on Indian growth, which has been taken care of to a great extent by this rate cut.

4. US Fed is likely to raise interest rates which will lead to $ strengthening against all other currencies but INR is likely to hold ground due to finer points in the policy 

a. Union and State Governments are allowed to sell bonds to FIIs and FPIs. This step will help in more than one way. Firstly the Lending by Banks to the Governments will be under check keeping ample liquidity for private players. Also the placement of bonds to Foreign players will make sure that global money to the tune of 25000-30000 crores comes into India, which will keep the INR from misbehaving once the FED raises rates.

All in all it was a thumbs up monetary policy. 

Now, how do we trade the markets?

We have always asked to stay invested in fundamentally good stocks. Our view remains the same. There is nothing wrong fundamentally with our markets. 

Technically view remains intact. Nifty is range bound between 7600-8200. Any move on either side will only come if it sustains above 8200 or below 7600. We do believe however that Nifty has most likely bottomed out and is poised for upward move. Currently 8200 is a big hurdle for Nifty and further up move to 8600+ can happen only if it sustains above 8200.

Stay Invested, Happy Investing 

P.S. India is now number 1 in FDI peeping China and US. We received $31 B in first half of 2015 as compared to $24 B in entire 2014. "Achche Din"

Week Ending 18 Sptember 2015

On the onset let me wish you a very Happy Ganpati Festival. May the Lord fulfill all your cherished dreams. Coming to the Markets, Markets saw a very volatile week, finally settling up around 3%. Majority of this upward movement may be attributed to 3-4 factors which are discussed in details below.

1. IIP : The IIP figures were out this week and were a surprise for the street. IIP grew by 4.2% against an expectation of 3.8%. The increase in the industrial production activity augurs well for the markets and the economy as a whole.

2. CPI & WPI : The CPI & WPI numbers were also out and the continue to be under RBI's comfort level. In fact we are no more an inflationary economy and have become a deflationary economy. The reduction in CPI & WPI make a case for the RBI to reduce interest rates and give a boost to the industry.

3. FOMC : FOMC decided to hold the increase in rates for the time being but continued to say that it will increase the rates by 40 basis points up to the calendar year end.

Commentry on the events:

IIP figures show a robust growth potential in the Indian Industry even at very high interest rates. CPI & WPI falling makes the RBI Governor's job even easier as far as cutting rates is concerned as the target of keeping inflation under 5% is achieved and shows no signs of rising in the near future. RBI had increased the rates when FOMC had decreased their rates and introduced the QEs. Now the tide is turning and RBI is likely to reduce the rates in the coming policy meet on 29th September.

The increase in interest rate in the US will most probably pull some money out of the emerging markets, mostly from the debt market. Though Equity markets will also see some pressure as and when it happens, the impact is likely to be marginal.

What should we do:

Fundamentally there is nothing wrong with our markets. The approach should be buy on dips. Accumulation of stocks is the way to go. We like to accumulate the ABC of the market

A: Automobiles

B: Select private Banking

C: Cement

Many a stocks from the ABC have been hammered out of shape during the last few months. They are attractively priced and should give decent returns in days to come.

Move in the next week: 

Nifty is unlikely to break 8200 in a hurry. We may witness range bound action for some more time. However if Nifty manages to sustain above 8250 we should see 8600+ levels. In the meanwhile keep accumulating good quality stocks. 

Happy Investing!!!!!!!