Nifty & Sensex corrected 9% each, due to Omicron fears worldwide, but recovered 3% each as news of new virus being milder and not lethal emerged. Nifty PE is trading at 23.7 as compared to 28.17, as the profit booking helped high valuations cool-off.

RBI Policy was announced today, and the status quo was maintained. The MPC also maintained “accommodative” stance. CPI inflation is projected at 5.3% in 2021-22. This consists of 5.1% in Q3, and 5.7% in Q4 with risk broadly balanced. RBI Governor said central bank would continue to manage liquidity in a manner to maintain financial stability.

Important events that will affect markets in December: 

• Fed Policy meet on 16^th December. Decision on increasing tapering speed and earlier raising of Interest rates in 2022 will be discussed. 
• Omicron spread and its impact in coming days will be keenly watched.
• 25000 Crore worth IPOs lined up in December.
• Bill to regulate crypto currency will be presented in parliament.

FIIs now have been net sellers in last 8 consecutive months, while DIIs are the net buyers, and retail participation has again been the saviour, helping the markets to rebound from lows.

IPO market will be hot again in December, with big names like Emcure Pharma, Delhivery, Aadhar Housing, Adani Wilmar, Go Airlines and 27 other companies lining up their new issues worth 25000 Crore.

Nifty & Sensex touched a new high of 18604 & 62245 respectively in Mid-October but had a sharp correction by the month-end. Nifty & Sensex fell 5% each. Large Caps corrected 5%, while Mid & Small Caps corrected 8% each. Valuation wise, these figures are in the overvalued zone and needs correction, which has started.

Reasons for correction:

1. Fed Policy meet on 3^rd November, for the start of tapering.
2. Big IPOs like Paytm, Policy Bazaar squeezing 27000 Cr liquidity from the market.
3. Markets rebalancing itself as per 2^nd Quarter results.
4. Oil breaching $100 mark again.

“If GREED & fear had to own one stock market globally for the next ten years, and not be able to sell it during that period, that market would be India,” – Christopher Wood, global head of equity strategy at Jefferies, wrote in his latest weekly note to investors GREED & fear.

“Any sell-off in Indian equities, triggered by tapering/ tightening scare on Wall Street will provide opportunities to add to Indian equities, most particularly if this coincides with a further likely rise in the oil price on an accelerating re-opening of the global economy,” Wood wrote.

Shaktikanta Das has been given an extension of another 3 years as RBI Governor, hence expect no major rate hikes as he is expected to toe Govts line in keeping a low-interest rate regime.

FIIs now have been the net sellers in the last 7 consecutive months, while DIIs are the net buyers, retail participation has grown considerably and again played a big role in the current rally. Post correction it is recommended to shift around 10% from Debt to Equity in this month.

Wish you & your loved ones a Happy & Prosperous Diwali!

Nifty & Sensex both touched a new high of 17947 & 60412 respectively in Sept. Nifty PE is trading at 27.34 multiple and Sensex is at 31.51 multiple. Valuation wise, they are in the overvalued zone and needs a correction, which has started. Nifty corrected 500 points last week & Sensex 2000 points.

Reasons for correction:

• Fed indication of the start of tapering from November.
• China’s biggest real estate developer Evergrande defaulting on interest payments.
• Power cuts in China due to rising coal prices & shortage for the same.
• Energy Crisis in Europe due to sharp rise in gas prices.

All the above reasons are global and nothing local. Manufacturing PMI rose to 53.7 from 52.3 and Inflation reduced from 5.59 to 5.3. 89crore vaccination doses have been given so far. Most of the lockdown restrictions are removed and schools & theatres were granted permission to reopen. With the festive season setting in, huge pent-up demand is expected to come up in the coming months.

FIIs now have been net sellers in the last 6 consecutive months while DIIs are net buyers, retail participation has grown considerably and played a big role in the current rally. A staggering 11 million new Demat accounts blew through the previous year’s record of 4.7 million accounts, and by almost double at that. IPO market will see 17 Companies tapping the market with 30,000 Cr worth of new issue. Emcure Pharma, Nykaa, Mobikwik & Star Health will be the big ones.

As Expected, tax filling dates has been extended till 31^st December 2021. Tax Filling glitches still exist, delaying the whole process. Post further correction, it’s recommended to shift a portion of the Debt portfolio to Equity this month. Speak to your advisor to know more.

Photo Credit: kbc.be

Nifty & Sensex crossed a new high, crossing 17k & 57K respectively. We had expected this figure by Diwali, but the market surprised all investors with an early Diwali Gift. This was the fastest jump ever, completed in mere 28 days’ time.

Reasons for this rally:

• Strong Q1 numbers & an expected even better Q2 numbers across all segments.
• Fed Powell going soft on tapering, giving new energy to bulls.
• Record Vaccinations, almost half of population covered with 1^st dose.
• Strong retail participation, never seen before.

Revised average target of Nifty by many brokers is now around 18.5k by Nov-Dec 21. Since Mid & Small Cap segments had seen a decent correction, it’s an ideal time to shift Debt allocation (around 10%) to Mid & Small Cap schemes this month. Due to the lack of any major negative news, we expect this rally to continue and touch new highs.

Only Threat: Possibility of third wave hitting early.

FIIs now have been net sellers in the last 5 consecutive months, while DIIs are the net buyers, with retail participation growing considerably and played a big role in current rally. IPO markets will see 9 Companies tapping the stock market with 12500 Cr worth new issues. Aditya Birla Sunlife AMC and Utkarsh Small Fin Bank will be the big ones. Tax Portal Bug: Infosys had been given the contract to launch new website for Income Tax Filling, wherein most of the data like capital gains from shares & mutual funds would have been automatically captured and filling would have become simpler. The new website was launched but with a lot of bugs making it impossible to file tax returns. Finance Minister Nirmala Sitharaman had given Infosys deadline of 15^th Sept to resolve the issues and make it work. Tax Fillings for clients had been delayed and most probably there will be an announcement of the extension of filling date deadline soon.

Photo Credit: visakhapatnam.in.locan.to

The stock market has been range-bound in July, with Nifty hovering in the range of 15600 -15800. Quarter numbers (Apr-May-June-21) were better than expected, led by IT, Cement & Consumer sector, while the Banking sector has been the worst performer (with below par results).

Overall View: after a strong FY21, earnings for FY22 have begun on a healthy note. 1QFY22 earnings are progressing in line thus far. The damage from the second COVID wave and the consequent lockdowns in April/May’21 has been much lesser than that from the 1QFY21 national lockdown. Management commentaries across the board suggest an improved demand environment post-June ’21, led by the easing of restrictions, lower active COVID-19 cases, and a pickup in vaccinations. However, the impact of rising commodity costs and, in general, higher inflation is reflected in the P&L. Asset quality in Financials has expectedly weakened sequentially. We estimate corporate earnings to continue to recover, as the underlying economy opens up, with progressively higher vaccination trends.

FIIs have been net sellers in the last 4 consecutive months, while DIIs are net buyers, a matter of concern, but expecting FIIs buying to resume soon. The IPO market is hot with bumper listings of Zomato, Clean Science & Technology, Tatva Chintan & GR Infra. Next few months, many IPOs are lined up – Devyani International (KFC / Pizza Hut), Policy Bazaar, Car Trade, Fino Payments Bank, Star Health Insurance, Paytm, Mobikwik, NSE, etc.

The RBI’s MPC meeting is scheduled for the coming week, however, the expectation is that the RBI too, just like the Fed, will not hamper the repo rates, so as to continue supporting impacted sectors with cheaper credit.

Positives: Healthy Q1 Earnings, High Liquidity, Reducing COVID Nos, High Vaccinations, Good Monsoons, easing of Restrictions, long Festive season, and Pent-up demand buying.

Negatives: Possibility of third-wave due to highly dangerous delta virus, and rising inflation.

Clearly, the Positives outweighs the negatives. Therefore, one can look at shifting a chunk of the debt allocation to equity, in case the market corrects further.

Photo Credit: kbc.be

Nifty has risen over 13 percent so far in 2021, and over 50 percent in the past year, soaring to the peak of 15,915 on June 28, 2021, but it seems bulls may be losing steam and the market would be prone to volatility, going further.

If the momentum continues, the next target is 16,800 – 17,000 in the next 6 to 12 months, but the journey would not be linear like it has been for a year, as most of the good news, be it vaccination, earnings, or economic recovery, is already priced-in.

FII’s have been the net sellers in the last 3 consecutive months, while the DIIs are the net buyers. The IPO market is hot, with 5 companies lined up to hit the primary markets, including Zomato, Glenmark Life Sciences, Clean Science & Technology, Krsnaa Diagnostics, GR Infra and Shriram Properties.

Key events to watch for will be the 1st quarter results, starting with Infosys, which is expected to deliver a strong performance. Banking & Financials will be the key sector to watch, as NPA numbers are expected to rise further. Retail Inflation in India is at 6.3% in May, crossing the RBI’s threshold, making commentary from RBI Governor interesting in the August Policy Meet, though he is expected to keep the status quo (on the rates).

We expect a strong performance from across sectors, the high valuations will be justified post the Q1 results. Hence July brings an opportunity to shift the Debt allocation to Equity, keeping us well prepared and ready for the next jump. The current weakness in markets should be used to timely shift at lower levels, though not much fall is expected.

Happy Investing!

Warren Buffett once said that it is wise for investors to be “fearful when others are greedy, and greedy when others are fearful”.  Current market is an absolute reminder of the above quote.

Sensex & Nifty have touched record highs and still going strong. Globally, mobility and economic indicators are showing a recovery. Strong growth, loose policy, and excess liquidity are boosting global equity markets to all-time highs. India has also crossed the milestone of $3 trillion market capitalization. Due to the impact of Covid in the April-June quarter, India’s FY22 real GDP growth estimates are being downgraded by 2.0%-2.5%. However, the 2^nd Covid wave has peaked out (more or less) and the pace of vaccinations is rising with improved supply. So, India’s economic recovery should come back on track by FY23.

FIIs have been net sellers in June but expected to come back strongly in 2^nd half of this year. Till then strong domestic flows and increased retail participation should support markets. Any correction should be temporary and minor. However, short-term upside may be limited, and the market are likely to remain range-bound.

Strong numbers from Large Cap Stocks have justified their valuations and hence their allocations have been increased this month. Mid-Caps have also been catching up fast. Small Caps are in high-risk zone and hence allocations for that segment is not recommended at present.

Since RBI will not further decrease rates and inflation is expected to rise, most likely the interest rates may go up in the future. Hence Debt funds may also need allocation change, from PSU & Banking to Floater or low duration funds.

Considering current & future scenarios, equity to debt portfolio allocation needs further restructuring and should be in sync with the changing market dynamics. It is advised to be in touch with your advisors towards same. Happy Investing!

Photo Credits: top10stockbroker

For the month of April, domestic equity markets rose on the back of brisk buying in the banking and finance segments. Upbeat earning numbers for the quarter ended Mar 2021 boosted the market sentiments, after a major private sector bank reported strong earning numbers. Positive global cues further added to the gains, after the U.S. Federal Reserve kept interest rates unchanged in its monetary policy review and re-affirmed its accommodative policy to support the economic recovery.

However, profit booking capped the gains to some extent. The overall market sentiment also remained muted as a devastating second wave of the COVID-19 pandemic showed no signs of abating with the country continuously reporting a record surge in daily infections.

Markets to remain sideways this month with Nifty range of 14200 – 15200. State elections are done and dusted, hence Govts full focus will now be on COVID control. Vaccinations above 18 age have started and if States are able to conduct this drive successfully, the market is going to touch new highs in coming months. 

Recommended to start accumulating stocks. Pharma, IT, Cement & Chemicals, as being quick runner segments. We suggested building equity allocation on a partial basis monthly, to accumulate or shift debt assets towards equity. Speak to your advisors for a guided experience.

Photo Credits: mdm.com