Newsletter Date: 21/07/2018
International Snapshot:
Tweeter has become a new battleground, at least for president Trump. He had been tweeting, that he is watching the rise in price of crude oil and is not very happy about it and that Saudi Arabia must do something for it, and crude comes down. In last fortnight crude fell 10% from its high to settle at 72$ per barrel (Brent). He tweeted Pfizer should have not rose prices of drugs & Pfizer rolls back the price rise. He has been tweeting on who he wishes to curb the trade deficit with i.e china, Europe, Canada etc & hey, their currencies are falling.
Now he is concerned about the appreciating $ and hike in fed rates. So can we assume he might softer his stance on trade wars? However if this continues for couple of more months, it shall result in wild swings in currency markets. Chinese Renminbi is down some 7% in last 2 months. We hit 69 Rs/$ today. FII & FDI flow both can take hit in such a scenario. World, which has just started to grow at a faster pace, may suddenly see a slump.
Whatever may it be but if appreciating dollar & rising rates come under check, India will be big beneficiary for sure.
Domestic Snapshot:
A little girl----- murmuring
Oh god! Please make Paris the capital of Portugal.
Oh god! Please make Paris the capital of Portugal.
Mother: Have you gone mad?
Little Girl: That’s what I have
put in my Geography exam today
This is plight of people holding poor quality stocks and waiting for quality to collapse:
(A quality investor’s tweet)
Everybody who has even a little exposure to Indian stock Market may have realised that the sensex or nifty which are trading at life high are not reflecting the true picture. Mid-small caps are hitting new 52 week low. Markets have become more skewed now, with nearly 5/10 stocks hitting new highs & dragging the Index up. People are now realising that Categorisation of MF schemes & surveillance mechanism of exchanges have played a big role here, which we had already highlighted in own newsletter dated: 9/6/2018. Categorisation of funds has resulted in lot of money pulled out from small & mid-cap funds to multi-cap & large caps and are resulting in lot of money now chasing few 100 stocks.
What happens next? It’s anybody’s guess.
- HNI’s & investors are losing their patience & this is seen from the intensity of fall in stock prices, with a small bad news. The common answers from the so called experts of the industry are its election year, trade wars, rising crude oil, so let the dust settle. Our argument is, a passive mutual fund investor will never know when the dust has settled & markets have started moving up. He should continue with his discipline good market/bad market.
- In political development, a no-confidence motion was brought against the Modi government on the 1st day of Monsoon session of parliament. After big uproar , hoopla and blame games ultimately Modi Government scored majority of 325 votes in favour of him. To us, it was just a strategy by opposition, to see the current Government’s strength for upcoming election; so that they can strategies accordingly.
- While there are 4 state elections in December which will give some idea on which government is headed to the centre. We would advocate increasing your exposure from Jan 2019 to equities; till than continue your routine SIP.
- CA Jayesh Gandhi
Disclaimer: This is an informative document and opinions expressed in it are our own and not any advice. We are not SEBI registered investment advisory or research analyst. We are AMFI registered MUTUAL FUNDS DISTRIBUTOR.
