Week Ending 26 February 2016

"Money is the most egalitarian force in society. It confers power on whoever holds it" ~ Roger Starr

Dear Patrons, the week gone by, was an eventful week. We had the expiry of the February contract in the derivatives market and the Railway Budget on the same day. This week was very volatile, with Nifty marking big swing downwards. Nifty started the week around 7200, made high of 7252 and then slid to 6961 losing all the gains made in previous week.

Next week starts with a BIG event for the markets, as we have The Budget on Monday. As we head into the Budget, we would like to advice caution and avoid leveraged positions till the event is over. 

Technically, Nifty is in the process of forming a bottom. Should 6950 hold on Nifty, we may see 7350 in a hurry, on breaching 6950, however we may see the previous low breached.

Today, that is on 26 February, the GoI published the Economic Survey. The readings from the Economic Survey paints a rosy picture about the Indian Economy, which, we have been saying for long through this blog. We have always maintained that small steps taken by the GoI will result in large impact on the Economy, and we have been validated by the Economic Survey.

Let us look at some data points.

1. Fiscal Deficit: In the last Budget the target for Fiscal Deficit was fixed at 3.9% of GDP and the Government has largely managed to keep it in check. 

2. Inflation: Inflation has by and large remained in check, mainly due to decrease in Crude prices and high interest rates. Looking at the inflation data, we feel RBI has room to cut rates further and boost the economic activity

3. IIP: IIP has been on a steady path of growth and with increased impetus on Make in India, we should see better industrial activity in future

4. GDP: India is the only shining star in the globe in the current recessionary scenario in the developed world. We expect to grow by 7.5% next year, which is a fabulous growth, in the bleak global outlook

5. Forex: There has been steady growth in Forex Reserve, though not satisfactory, it has increased. We should see more money coming in India over next year, which in turn should help the INR gain some lost ground

6. Agricultural Activity should see major thrust in this Budget, as we are reeling from 2 years of drought. 2016 however promises to be good as far as monsoon is concerned as the El-Nino effect is not present in this year. 

All in all we expect a good Budget, with significant allocation for Agri sector as well as Industry. Our motto remains the same. Accumulate good quality stocks.

Stay Invested!!

Week Ending 19 February 2016

Dear Patrons, welcome to yet another edition of the weekend blog. As we head into the Budget, lets have a look at what happened in the market in the last week and what is in store for the coming week. Today, we will look more at basics of investment than the markets. However lets spend some time on the markets first.

As stated in the last blog, Nifty failed to hold on to 7350, which resulted in a massive sell off in the markets. Thereby creating a panic situation. As they say, whenever there is a panic situation in the market, the bottom is near. Nifty slid to 6869 and recovered in the week to close above 7200. We like to believe that the worst is over for the markets and 6869 should be the bottom for this fall of almost 2300 points or 25% on the Nifty. If 6869 is considered the bottom then Nifty assumes targets of 7300 and 7500 in near future. 

Let us now talk about investment basics.

What is an investment?

The easiest answer to this question is "anything that gives a return over a period of time is known as investment"

What are avenues of investment?

There are many avenues available for investment, namely Bank Fixed Deposits, Bullion, Real Estate, Equity, Mutual Funds etc.

Which is best investment option?

This is a tricky question, the answer to this question depends on what are our goals and what is the investible amount available with us along with the time frame. We will look one by one.

1. Bank Fixed Deposits: These are perceived to be the safest investment option. It has a drawback though. The interest rate on an FD is less than 10% in India and assuming inflation rise of around the same nature i.e. 10%, the return on FDs does not cover the inflation let alone fulfilling goals.

2. Bullion: Bullion is also a safe bet, however there are issues regarding safety and purity of the Gold that we buy. Also it is a costly affair to invest in Gold, looking at current prices. 

3. Real Estate: Again a safe investment destination, but it requires bulk investible amount and is highly illiquid.

4. Mutual Funds: Mutual Funds have not been able to generate the kind of returns one expected over a period of time and liquidity is still a concern as far MFs are concerned.

5. Equity: First and foremost, its a bit risky if done without study. Equities, however, have given best returns when we look at the 80 year performance of all the asset classes. Also Equities are liquid and there is no threat of someone stealing it. Investment in Equities can start with a small amount also.

In all the asset classes Equities have given best returns with moderate risk and hence it is the most preferred investment destination in the world.

All in all we like to reiterate our stand

Stay Invested!!!!!

P.S.: We do not consider Insurance as an investment option.

Week Ending 5 February 2016

Dear Patrons, welcome to yet another edition of the weekly blog. We saw extreme volatility in the course of the week gone by, however we believe volatility will very much be a part of our markets in the foreseeable future. Increase in volatility in our markets is more due to global peers than local events.

Nifty started the week around 7600 and slid down to 7350 and regained most of the ground on the last two trading sessions closing at 7489. During the fall mid caps were the victims. Some of the mid cap stocks were brutalized in the last fall.

Nifty should find support around 7350 to act as base for some more up move. Barring a negative news on the global front, we should see a relatively stable market here on wards. This being the budget month the event risk remains in the market. We do not rule out a pre budget rally in our markets though. 

Last week both, the US Fed and the RBI held status quo in the interest rates. The Fed talk was pretty dovish and suggested no increase in interest rates in March. This resulted in the USD falling against other global currencies. The INR also gained some of the lost ground during the last two trading sessions. The RBI also held the rates constant. We have seen 125 beeps cut this fiscal and do not see any more cut in FY16. 

The results season is by and large over. There have been some extremely good results and some dampeners, however, we like to believe that the Indian economy is in very good shape and we should see improvement in the GDP in FY17. The GoI thrust on infrastructure spending augurs well for the industry as a whole along with Make In India campaign, which in all likelihood will result in India becoming a manufacturing hub, creating more jobs and expendable income, which in turn should push the growth rate higher. (Boeing is said to be in talks with GoI for their first manufacturing unit outside the US)

As seen above, should Nifty hold 7350, we are likely to see 7580-7700 levels in the near future. Many of the good quality stocks have been hammered out of shape in last one year. We strongly recommend to add good quality stocks to the portfolio in this period for long term.

Stay Invested. Happy Investing!

Week Ending 22 January 2016

Dear Patrons, first of all let me apologize for a long break in this blog due to some unavoidable circumstances. Coming back to our weekly analysis of the equity markets. The last week has seen a roller coaster ride in the markets, with the markets witnessing up and down movements throughout the week.

Nifty during the week saw high volatility and big moves both on the up as well as down side. During the week Nifty saw High of 7470 and low of 7241. The biggest reason for the fall can be attributed to the Chinese markets. Lack of stability in the Chinese Markets had a big impact on the world markets including emerging markets.

One more attribution for the fall can go to the currency reading. INR fail sharply against the USD, which prompted the FIIs to sell off Indian equity. The INR though behaved very well and held its ground as compared to other currencies. However, we would like to caution that the INR may post a new low in coming period.

Most of the world markets lost close to 3% in one single trading session, however, the tide turned positive after the ECB chief's announcement of further stimulus to the European Union economy. This positive news helped world markets gain some of the lost ground and almost all the markets closed with handsome gains.

We had clearly mentioned in our last blog that we see larger downside in the markets, when Nifty was trading around 7800. Current reading on Nifty is around 7400, which goes to show our conviction in technical analysis.

We still maintain our target of 6800 on the Nifty to arrive eventually. In such a scenario what do we do?

The mantra remains the same. "Accumulate" good quality stocks in every decline with a long term view. Our markets should look upwards in H2CY16. With a strategy to hold stocks for a long term one can start accumulating certain good quality stocks with every dip in the prices.

Happy Investing!!!!!

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!