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"