Profits earned over last one year have suddenly turned into losses over the last two months. Use this melee in the global markets to add on stocks to your portfolio.
In the New Year post of MarketFastFood, we had mentioned that the yearend target for Sensex can be placed at 33600 – 35000 and before reaching the target we may see a resistance in a range, the upper figure of the range was 30006.
Market was very kind to behave, as precisely as mentioned by us. Not that this was first time, market in the previous occasions has again done exactly as we said. We are thankful to the lord for the silent guidance in studying the markets.
We had said 30006 and what did the Sensex do? On 4/Mar/2015 it hit 30025, tested the upper figure of the mentioned range and fell down. Frankly we didn’t imagine that market would correct so badly. VRIDHI has few jealous competitors out there and hence those people will be saying to themselves that: there is a difference between 30006 and 30025 and hence how can you use the word exactly? We would like to mention here that on an index of 30000 +/-300 points will also be termed as exact. We were very close though!
We will talk on the yearend target in the next post.
Coming back to the point, market corrected fiercely and we saw a low of 24834 on 8/Sep/2015. People who entered markets after 2008 saw a single day correction of 1500+ points for the first time. Seasoned investors are aware that such types of movements occasionally occur in the markets. But, investors who entered in 2009 and later years may be in a state of shock.
We almost tested the pre Modi victory levels. Meaning all the gains of past 12 months got wiped off and the portfolios which were showing profits are today back to square one and some of them even at negative levels.
The most common question we face today is: will market ever recover? Is it time to invest further? Or shall we sell and take out all our money?
What were the local factors behind the fall and what were the global factors?
The first local factor which spooked the market was the MAT on FII’s issue. The government could have avoided the controversy and the finance minister should have in the budget speech itself announced that MAT is not applicable on FIIs which do not have representation in the country.
We don’t want to comment on whether the goof happened due to lack of experience. Anyways the issue was resolved quickly and the FIIs are now exempted from April 2001.
The second factor was the Non Passage of the key reforms bills. The land bill was scrapped due to misinformation which was being spread by vested interests in opposition benches and the GST was blocked by some parties just for sake of opposing the bill.
It is just a question of time that GST will be passed since, people have started putting the pressure on those opposing it. Not that GST is the sole thing which will help India grow, just that it will speed up the process.
The final most important thing which has been a worry for the market is the deficit rainfall. The monsoon season has officially ended with a 14% deficit.
Are these problems a cause of BIG worry? We don’t think so. With passage of time all things will be set right. All other macro factors are in favour of our country and the policies of the government are on right track. If they continue working in the current way, we are sure we will be much higher than what we are today.
The major global factors have been on account of ailing dragon i.e. China and the slump in commodities market.
Well we don’t want to deliberate too much on global factors since we feel every problem outside India is actually Advantage India! Sounding selfish? Yes we are, and nothing wrong in thinking about the country. It’s time Bharat ruled the world.
So what should we do now? Buy Sell or just wait?
Investors with time horizon of 3+ yrs should not wait. Just invest. We will see Sensex and Nifty close to double from here in next 4-5 yrs. The government looks committed to growth, we as analyst can see what is happening. Yes, too much of efforts are being put in by the media and the opponents to divert the attention of the people. Will people get carried away is something which we need to wait and see.
Will the volatility continue? Yes, it will. Global conditions will not let us live happily. Internally the market will watch the upcoming Bihar elections very closely. If the current dispensation in Delhi is elected in Bihar, throwing out the so called grand alliance, we will see a sudden spurt in the sentiments. A defeat will temper down the blockage policy adopted by some parties and a bad defeat will force them to start talking growth.
Thus, on Nov.8 we will come to know if Bihar gives us Diwali gift or not. Hope sense prevails with every voter.
India is hungry for growth and no one should become a roadblock.
Finally, we are bullish, so should you be. Are you an existing investor? Then Invest More! Are you thinking of investing? Then Invest Today!
At Investors Service
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