Start of the calendar year 2020, the trend is moving towards Mid & Small caps stocks.
Mid & Small-cap has had a consecutive two years of fall, and the gap between large-cap and Mid/ Small-cap continues to stretch. So far in January, NIFTY MIDCAP 100 and NIFTY SMALLCAP 100 recorded only 2 negative sessions, out of 13, which shows sign of a bullish trend.
In global markets, United States, Europe, China and Japan, these categories of stocks (Mid & Small) has already started showing sign of recovery, and in Indian history, based on historical trend, index/ stocks generally follows their global peers.
Sensex and Nifty are at an all-time high, due to inflows in the market from FII & DII, mainly driven by the large-cap or industry leaders, as investors prefer to invest in safe stocks, after many uncertain events that took place in the past (NBFC crisis, economy slowdown etc.).
Monday opened to a bloodbath on the Dalal-Street, due to global tension between USA and Iran, leading to a single day plunge of almost 2% with Nifty and Sensex on Monday.
The week remained volatile, with a roller-coaster ride, leading to a sharp recovery after de-escalating issues further. On a weekly basis, Nifty gained 1.3% (160 points) and Sensex gained 1.38% (560 points), recording once again all-time high levels.
Gold prices hit the all-time high at Rs.42,420 due to uncertainty in the global market, as people choose to park funds in gold (as a safe investment). Over the period, the 1-year gold prices have surge 26.6 per cent.
On a similar note, Oil prices jumped four months high after the U.S drone strike, to mark USD 68.91, which recovered to USD 65.50 towards the weekend. Stocks: Q3 earnings for Emami paper, reported 222% increase in net profit and locked upper circuit at 10% (Rs.89.5); Infosys was up 1.3% ahead of Q3 earnings, with audit committee finding no-evidence of financial impropriety; Yes bank fell 5% on resignation of Mr Agarwal as an independent director of bank.
Investors witnessed pains and gains during the year 2019.
Jan to June 2019; markets rallied mainly due to Re-election, and a high hope on a financial budget.
July to September 2019; with a lacklustre budget, FPI taxation, economic slowdown, rising NPAs, blended the divestment in the Indian market. Only when Finance Minister rolled back the FPI taxation and reduced corporate tax rate (one of the biggest decisions in the last 2-decade), the market took the momentum and the broader index, i.e. Sensex and NIFTY surged to an all-time high.
While it may seem that the performance of Sensex and NIFTY was at par, giving ~14% returns, it is only when you peel the layers further, you will see that only a few stocks dominated the show and rallied. Due to a larger market share these few shares have, resulting in a higher weight in the index, they drove the index up.
Hence this exuberance of surging market is just an “eye-wash” 😉.
While the giants rallied; the other stocks in the index were lagging. The major upswing is yet to be seen towards mid-cap and small-cap index, which gave a return of -0.3% & -9.9%. The gap between the Large Cap returns and Midcap are at a 2-decade high.
Going forward, we’re expecting the gap to narrow down, for that to happen, Mid & Small cap must outperform the large-cap, which should eventually take place, as and when the earnings of companies improve, which would also happen parallelly when the economy improves. Jan- 2020 will be the first quarter to report the earnings with the effect of corporate tax-rate cut, the improvement in earnings will justify the valuations of few companies which are already trading at a higher valuation, but for others, it may give decent upside momentum. A pre-budget rally is also very likely (to happen), a lot of expectations are built up from the Budget, especially in the current juncture of the economy.
The three exclamations represent MoneyFrog’s inherent value, i.e. Wealth, Security & Protection, that’s why I decided to express it with three exclamations!!!
New Year also represents, not just the “Party-mood” to celebrate, but the “New Year Resolutions”, we proudly write down or post it on social media 😉.
Resolutions are nothing but Goals, which we decide to fulfil in a few months to 12 months. And, if I recall my resolutions (as far as I can think), I have been making them since I was in my twenties, and in terms of achievement & progress, it’s just been a fad for me, which usually lasts few weeks to few months, on a max.
But over the years, I have evolved, and thought of sharing my experience:
Review current year – before deciding on the resolutions for the new year, I spend time on my current resolutions (usually few days to a week), i.e. to review my current year resolutions, an exercise to simply write down month-wise progress & score it on a scale of 1 to 10.
Resolution logic – resolutions are not meant to be decided based on fan following or what others are doing, but what I can do & feel proud about. Also, I ensure that my resolutions are slightly uncomfortable, as anything easy isn’t challenging.
Resolution count – now since I am clear on current year achievement & miss-outs, next step is to decide & bring my resolution count to max 1 or 2, against each category for the new year. I usually follow 5 categories:
Personal – Health/ Fitness
Family – Relationship/ time-out
Work – Project/ Revenue
Learning – Read/ Courses/ something new
Money – Financial plan/ New avenues/ Debt etc.
Resolution journal – there is no meaning to create resolutions if I cannot monitor. As a matter of fact, my resolution success, over the years kick-started, only when I adopted the journal method. Journal is nothing but a note-pad, with written down resolutions & a daily/ monthly progress sheet. I’m from the old school of thought, hence a note-pad 😉 (whereas you can always have a new-age mobile app to help).
“What you get by achieving your goals is not as important, as what you become by achieving your goals”.
With 2019 about to close in next few days, Indian benchmark indices, Sensex and Nifty snapped three days of losses and managed to close high on Friday, due to positive cues from domestic & global markets. On a weekly basis, Sensex lost 0.19 percent and Nifty declined by 0.14 percent.
Profit booking was seen across the sector this week, due to fear of missing on fiscal deficit target with a struggling economy and shortfall in revenue collection. Government is unlikely to complete privatization of Air India, BPCL and Container Corporation of India by FY20, which was part of meeting fiscal deficit target plan.
According to ICRA report, the asset quality of the banking sector to improve further, with declining slippages and improvements in recoveries, which supported the banking stocks to rally, and near-term profitability may increase.
RBI announcement on simultaneous purchase and sale of government securities on 30th December through special open market operations for Rs.10000 crore. This is a second time, when such operation will be performed, following a review of liquidity situation.
On an optimistic note, 2020 will bring more cheers, compared to the current sentiment in the markets. Wish you fabulous health, wealth & security in 2020!
Indian benchmark indices Sensex and Nifty touched its all-time high and touched 41809 & 12293 respectively, on positive cues from the global market and FII’s buying. On a weekly basis, Sensex gained 730 points or 1.8% and Nifty gained 187 points or 1.55%.
FII’s bought stocks to the tune of Rs. 4552 crores this week in the cash market, whereas DII were the net sellers.
According to Bloomberg data, investors preference towards large-cap category has increased, due to liquidity problems in NBFC’s, uncertainty in the market, current growth slowdown. Resulting in market capitalizations gap widen, in two decades, between large-cap and mid-cap/ Small-cap stocks, which implies that huge room ahead in quality with mid & small-cap stocks.
Fitch rating on Friday affirmed India’s sovereign credit rating at ‘BBB-‘, with a stable outlook and growth outlook still at solid, as compared to peers, anticipating current FY 19-20 at 4.6% and likely to grow next FY at 5.6%.
US President Donald Trump’s comment on near to finalizing trade deal between US and china lifted the market sentiment to a new high today. Though exact details are yet to be announced (later in the evening) and may spur further jump on Monday.
IPO: The 750 crore Ujjain small finance bank IPO, which was subscribed 165 times, making it the highest subscription in a year, saw a debut with 60% gain (Rs.62 opening against issue price of Rs.37). India’s first exchange-traded fund; i.e. Bharat Bond ETF is launched this week, with the investment strategy of AAA-rated government-owned companies, and with lower credit risk.
Rising food prices, pushed the retail inflation in November to raise three year high of 5.54% which is above RBI’s target rate of 4%, indicates the possibility of a further pause in a rate cut, while industrial sector output shrank by 3.8% in October, due to slow growth.
Indian benchmark indices ended higher on positive cues from the global market. On a weekly basis, Sensex gained 580 points or 1.43% and Nifty gained 190 points or 1.59%.
December month started with some negative sentiments in the Indian equity market due to uncertainty in global markets, as well as Indian market, like lowering GDP numbers, Monetary policy outcome, US-China trade war, FII sell-off etc. On a weekly basis Sensex lost 1.19% and Nifty declined 1.36%.
FII (Foreign institutional investor) were net sellers in the first week, to the tune of Rs.2990 Crores, whereas DII (Domestic institutional investor) was the net buyer.
RBI surprised everyone, kept the policy Repo rate unchanged to 5.15% with ‘accommodative’ stance, amid slowdown and increase in the inflation target. RBI also slashed GDP forecast for FY-20 to 5% from an earlier projection of 6.1%.
IPO: the Bumper listing for CSB share, listed 41% up at 275 and touched 51% to mark 307 in a day on 4th Dec, whereas Ujjain small finance bank IPO subscribed 165 times, highest subscription in a year which will make a debut next week. India’s first exchange-traded fund, i.e. Bharat Bond ETF to be launched in this month with the investment strategy of AAA-rated government-owned companies with lower credit risk.
It’s shocking to read Karvy Stock Broker’s story this week. What’s the actual fact, the modus operandi, who all have suffered, the quantum? will only come out in due course of time (post the investigation). But my biggest concern is not about these scams (as scams will keep happening in a growing economy), but the speedy trial, or the law & regulators, to take over and act.
NSCL scam of 2013 (5000 crores), is still to be resolved & customers refunded their money.
PMC Bank crisis, where all the account holders (upward of 50k) are still suffering, with heart-rending stories.
Goodwin Jewellers (Gold scheme) scam, still to be traced.
But surprisingly, we have some common threads in all this, and if taken care, will help avoid same. Customers who are stuck in these scams, usually are the ones who wanted higher returns, have disregard to the basics of investment, and above all, didn’t question; as either it’s the GREED which took over, or the HERD mentality of following the others, towards the account opening with these firms.
SIMPLE RULES to follow for any investment account opening:
First, ask as many questions: like, how the returns are generated, its calculation, company founders background, the universal thumb rule on investment basics, etc.
Most Important, nothing comes FREE: hence disassociate from any account or services, offered as free, or on a similar trick, or let say, commission-free.
Second, updated KYC: i.e. ensure that your mobile no & email ID is registered with your Bank, Broker & all your investment accounts. This means that you receive all transactional messages (SMS & Email), as & when it happens.
Third, if something is too good to be true, it’s better to junk it. NSCL scam, I remember, offered very high returns. How can someone generate such returns? Similarly, PMC bank, most of the customers are from just one community. Why just follow others, just because it’s from the same community? Moreover, PMC Bank is a cooperative bank, with a dual regulator, resulting in a lot of grey areas in terms of governance & compliance (which is very well known). We have had many cases of cooperative banks getting into trouble earlier (Madhavpura bank in 2001 going bust, is one such case).
IS MY PORTFOLIO (or account) SAFE?
The answer is Yes (it’s safe), as-long-as you have green ticks on all the above points.
In case you don’t have green ticks on some (or let’s say all), just go back to each account of yours & first update your KYC. Post that, complete the other checks. Now if you are not convinced, go ahead & close your account (& shift to safer investments).
One needs to just learn & adapt … and not worry & panic.
After months of net selling, FII (Foreign institutional investor) remained net buyers in November month, to the tune of 14,817 crores, whereas DII (Domestic institutional investor) opted for profit booking & were net-sellers.
Today (or Friday), the market witnessed selling pressure due to GDP growth announcement, which is expected to fall below 5% for the first time, since last six years, due to slowing demand, weak IIP data, slump in export, and global slowdown, resulting in further downfall. Sensex settled 336 points down at 40793, and Nifty settled 95 points down at 12056.
The CSB Bank IPO opened with a huge response, subscribed 87 times on Tuesday, and will make a debut on 3rd December, next week
Shares in focus; Reliance industries crossed the 10 lacs crore mark by market capitalization, India-bulls housing finance surged 40% in last three days after regulators gave them clean-chit (did not find any irregularities in loans given to certain entities), and Auto sector gained on scrappage-policy news.