Not Much to Fear

181223 – Those who had read the previous MarketFastFood article dated 9-12-18 would have found things post that very interesting. If you did not read Click Here, read it first and then continue reading this article.

First, I had said, don’t fear the state election results too much, they are going to be insignificant in the current scenario. I had posted two charts showing how markets have behaved in the past.

What happened finally? Though all the three states were lost by the ruling party, the markets gave thumbs up to the results. The Sensex and Nifty closed in the green on the same day. Why? It’s all due to the vote share pattern! If you look at the vote share, as an investor you will be least bothered on the results outcome.

Second, Though I had mentioned market looks good, the volatility will remain. Check the data, on the article day 9-12-18, Sensex was 35673, it hit high of 36554 on 19-12-18 and as I write today’s MFF, we are at 35742, hardly any movement!

Third, It was mentioned that RBI will not increase the rates and it went as expected. No rate hike and no impact of Urjit Patel’s resignation.

Fourth, I had mentioned that we had recommended MGL to MFF clients and the stock still remains in our portfolio’s. It hit a high of 907 recently.

Hence, my stance on the market continues to be neutral right now, Buy on dips, but be very selective on what you are buying. Volatility will persist till Lok Sabha Elections and hence no blind buying until then. Seek an Investment Adviser’s help.

Till the general elections are over, my views can drastically change as the events unfold, hence stay tuned to and follow this page. Read the last paragraph of this article.

One can ask why am I neutral and not negative on the market in spite of America’s partial shut down.

As of now, I am least bothered about what is happening in America. Not that they don’t affect us, just that I don’t fear America movements like before currently.

Good things are happening in India.

Inflation is so much under control that RBI won’t think of rate hike even in the next meeting. Remember the inflation in 2012-13? It hit above 12% and we are today under 3% little more down and we can reach deflationary situations! That would be negative but will not happen.

Banks are collecting the earlier written off NPA’s back. Government is funding the Public Sector Banks heavily. Look at the stock movements of strong PSU banks. They are so stable. (Not a buy recommendation)

The GST rates have been cut yesterday. Now hardly around 22 goods are remaining under the 28% category. The market will celebrate this for sure. I have in a number of TV interviews and articles said that in 2-3 yrs post-GST the overall tax paid by the common public will come down. A recent report already states that a common man is saving Rs.320 already, mainly due to FMCG products.

We as a country are heading into interesting times. Don’t go by what news you read. With elections hardly 4 months far, you need to read every news with two teaspoons of salt. Better to stay connected to VRIDHI.

I promise to mention few Investment Ideas before the New Year article. Keep following us. Read the below para.

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Happy Investing

Vivek Karwa

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