Right Time To In­vest In The Mar­kets, Re­gard­less Of Di­rec­tion

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In­dian stock mar­kets took a respite for the sec­ond con­sec­u­tive week, post a sharp fall of 3.5% in a sin­gle weekly tick. The rea­sons for the fall be­ing not so con­vinc­ing cor­po­rate earn­ings data and un­favourable macroe­co­nomic data which, go­ing for­ward, may re­frain RBI from cut­ting rates any soon dur­ing the year. In the ex­ist­ing cir­cum­stances, it was pre­sumed that mar­ket­men would re­sort to profit-book­ing af­ter nearly 28% con­sis­tent up­surge post-de­mon­eti­sa­tion.

The cross-bor­der ten­sions with China owing to Dok­lam is­sue have been wors­en­ing and a war could lead to dam­ag­ing trade re­la­tions, un­less the is­sue is re­solved peace­fully to the sat­is­fac­tion of both par­ties. Not­with­stand­ing the stand-off, many in­vestors feel that even if war-like sit­u­a­tion oc­curs, it would not af­fect the mar­kets greatly.

Con­sid­er­ing do­mes­tic macro-econ­omy, even as mar­kets tum­bled from their peaks, the agro-based and ru­ral stocks surged ahead of favourable mon­soon. How­ever, the re­cently re­leased data of 5% be­low nor­mal mon­soon would re­main a mat­ter of con­cern for the same stocks, un­less mon­soon re­vives. As for bank­ing and fi­nance, it’s the time af­ter the RBI rate cut that com­mer­cial banks too cut in­ter­est rates fol­lowed by AGMs and div­i­dend an­nounce­ments, which would keep the bank­ing stocks un­der the lime­light in the coming ses­sions. On the GST front, the fil­ing of in­come tax and re­turns have been ex­tended to August 25. With this, the IT dues and GST are to be paid be­fore Septem­ber 15 and 20 re­spec­tively, which may bring in liq­uid­ity crunch go­ing for­ward in the mar­kets, de­spite fes­tive sea­son. In­dia ex­pects GDP growth rate at 6.6% in Q1FY18 as against 6.1% in Q4FY17, de­spite GST roll-out which has re­frained mo­men­tum pick-up in ma­jor in­dus­tries. More­over, es­ti­mated re­cov­ery to the level of 7.4% is main­tained on the back of re­trieval in cor­po­rate earn­ings in H2FY18 and prof­its kick-off from the next fi­nan­cial year.

All said and done, it should not mat­ter whether mar­kets would bounce back or con­tinue with the cor­rec­tion phase for some more time. Most im­por­tant is the sec­toral per­for­mances and pick­ing up the right stocks with sound man­age­ments. SEBI has duly taken care of in­vestors' in­ter­ests by man­dat­ing BSE to delist first 200 shell com­pa­nies and or­der­ing pro­mot­ers to im­ple­ment buy­back for re­cov­er­ing in­vestors’ money soon.

In­dian mar­kets may re­main in con­sol­i­da­tion with lack of ma­jor do­mes­tic trig­gers in the coming days. The global mar­kets would be driven by the re­lease of man­u­fac­tur­ing PMI data and grow­ing con­cerns over the US do­mes­tic po­lit­i­cal un­cer­tainty over Trump’s ad­min­is­tra­tive ca­pa­bil­i­ties may bring about some pes­simism in the US mar­kets. The de­lay in putting for­ward the tax re­forms by the US govern­ment would bring in some anx­i­ety in the US fi­nan­cial mar­kets, thereby af­fect­ing other bourses as well.

In­dia’s ma­jor bench­mark in­dex Nifty has a strong sup­port near 9685, fol­lowed by 9450 in the medium term. On the up­side, the level of 9950 fol­lowed by 10100 would bring Nifty back on track for fur­ther rally. Nev­er­the­less, sta­bil­ity has re­placed volatil­ity in the mar­kets. Hence, it is the best time to trade as well as in­vest in the mar­kets re­gard­less of the di­rec­tion.

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