morning thoughts...
The markets are likely to trade volatile and swing like a pendulum in coming session with positive bias.
Technically the trend has not been compromised yet with 7600 as crucial supports on the lower side whereas 7850 is likely to act as resistance for the nifty.
However, there is an interesting piece of statistic that is not getting its due importance.
We are here referring to the decline in the participation of retail investors in the current stock market rally, which is being more than made up by institutional investors. Consider this! In the last one month alone, around Rs 200 bn has been raised in the market through the qualified institutional placement (QIP) route. Meanwhile, retail investors are getting left behind, the latest shareholding pattern data for 1000 odd companies suggests small investors have brought down their stake in two thirds of these companies.
The trend is irrespective of the sectors or size.
After the bitter experience of 2007 rally followed by a long bear phase (that led to erosion of most their wealth), the retail investors seem to be more focused on booking profits and protecting the downside.
The most important factor driving the stock markets is obviously the easy money policy being followed by central bankers of the developed world. With so much liquidity in the markets, most of the asset classes are rising with the danger of bubbles forming in some of them. However, none of the developed economies have displayed any meaningful signs of a recovery. So, in an era of escalating conflicts and weak global growth, if global stock markets are rising, it only shows the extent of distortion that the central bankers have created.
We think it would be foolhardy to completely ignore geopolitical risks. For one, in a global economy which is becoming more and more interconnected, prolonged conflicts of any kind are bound to have some sort of an impact on GDP growth. Oil is a classic case in point as prices typically rise on geopolitical risks; thus, persistently high oil prices can wreak havoc on GDP growth. Even though the extent and the timing of these risks will always remain uncertain, some impact from them will have to be priced in.
Thus, for Indian investors, investing in equities still has the potential to increase wealth provided money is put into strong quality stocks. Not just that, given that we have always been advocating the principles of asset allocation, we believe that investors should also have some part of their portfolio allocated towards gold. In this way, equities are helping you participate in the India growth story. And gold to some extent is insulating your portfolio from the rising geopolitical risks and cheap money policies in recent times.
It has been around 6 years since the 2008 global financial crisis broke out and the response of the Fed has hardly been satisfactory. Indeed, a dangerous cocktail of low interest rates and massive bond buying has only increased liquidity and fueled the prices of various asset classes. The economic scenario has largely remained weak. While the Fed has been trimming its bond purchases, it has been rather vague with respect to its interest policy going forward. However, there is a minority of Fed officials that believe that it is high time that the US central bank stops these loose policies and begins raising interest rates. Indeed,these Fed officials fear that too much stimulus could fuel bubbles and trigger rapid inflation and we believe that these concerns are well founded. It is indeed quite ironic that the 2008 global crisis was a product of a loose monetary policy among many other things and the only way the central bankers have addressed this issue is to do more of the same. Thus, unless there is an end to such accommodative policies, another crisis of bigger proportions could very well be on its way.
Coming to the commodities markets bullions are likely to trade very volatile with a positive bias and the strategy remains to buy on dips.
Base metals are also in uptrend , however they may witness mild profit booking but it would be an oppurtunity to buy for short term.
Energy - crude looks strong for a buy whereas natural gas remains weak and is a sell on rise.
Wednesday wealth creators
Jackpot and Fii - Buy Atul ltd , Sparc , Financial technologies
Double and Triple Bumper options - Buy Tcs 2500 ca, Idea 150 ca , Hindalco 190 ca
Buy Nifty and Bank Nifty
Buy Gold , silver , zinc , crude
www.astroeyes.blogspot.in
Last Days -
Jackpot and fii calls - hitachi home zoomed 37 rs , indoco remedies rose 18%
Bharti 340 ca , idea 140 ca - doubled
The markets are likely to trade volatile and swing like a pendulum in coming session with positive bias.
Technically the trend has not been compromised yet with 7600 as crucial supports on the lower side whereas 7850 is likely to act as resistance for the nifty.
However, there is an interesting piece of statistic that is not getting its due importance.
We are here referring to the decline in the participation of retail investors in the current stock market rally, which is being more than made up by institutional investors. Consider this! In the last one month alone, around Rs 200 bn has been raised in the market through the qualified institutional placement (QIP) route. Meanwhile, retail investors are getting left behind, the latest shareholding pattern data for 1000 odd companies suggests small investors have brought down their stake in two thirds of these companies.
The trend is irrespective of the sectors or size.
After the bitter experience of 2007 rally followed by a long bear phase (that led to erosion of most their wealth), the retail investors seem to be more focused on booking profits and protecting the downside.
The most important factor driving the stock markets is obviously the easy money policy being followed by central bankers of the developed world. With so much liquidity in the markets, most of the asset classes are rising with the danger of bubbles forming in some of them. However, none of the developed economies have displayed any meaningful signs of a recovery. So, in an era of escalating conflicts and weak global growth, if global stock markets are rising, it only shows the extent of distortion that the central bankers have created.
We think it would be foolhardy to completely ignore geopolitical risks. For one, in a global economy which is becoming more and more interconnected, prolonged conflicts of any kind are bound to have some sort of an impact on GDP growth. Oil is a classic case in point as prices typically rise on geopolitical risks; thus, persistently high oil prices can wreak havoc on GDP growth. Even though the extent and the timing of these risks will always remain uncertain, some impact from them will have to be priced in.
Thus, for Indian investors, investing in equities still has the potential to increase wealth provided money is put into strong quality stocks. Not just that, given that we have always been advocating the principles of asset allocation, we believe that investors should also have some part of their portfolio allocated towards gold. In this way, equities are helping you participate in the India growth story. And gold to some extent is insulating your portfolio from the rising geopolitical risks and cheap money policies in recent times.
It has been around 6 years since the 2008 global financial crisis broke out and the response of the Fed has hardly been satisfactory. Indeed, a dangerous cocktail of low interest rates and massive bond buying has only increased liquidity and fueled the prices of various asset classes. The economic scenario has largely remained weak. While the Fed has been trimming its bond purchases, it has been rather vague with respect to its interest policy going forward. However, there is a minority of Fed officials that believe that it is high time that the US central bank stops these loose policies and begins raising interest rates. Indeed,these Fed officials fear that too much stimulus could fuel bubbles and trigger rapid inflation and we believe that these concerns are well founded. It is indeed quite ironic that the 2008 global crisis was a product of a loose monetary policy among many other things and the only way the central bankers have addressed this issue is to do more of the same. Thus, unless there is an end to such accommodative policies, another crisis of bigger proportions could very well be on its way.
Coming to the commodities markets bullions are likely to trade very volatile with a positive bias and the strategy remains to buy on dips.
Base metals are also in uptrend , however they may witness mild profit booking but it would be an oppurtunity to buy for short term.
Energy - crude looks strong for a buy whereas natural gas remains weak and is a sell on rise.
Wednesday wealth creators
Jackpot and Fii - Buy Atul ltd , Sparc , Financial technologies
Double and Triple Bumper options - Buy Tcs 2500 ca, Idea 150 ca , Hindalco 190 ca
Buy Nifty and Bank Nifty
Buy Gold , silver , zinc , crude
www.astroeyes.blogspot.in
Last Days -
Jackpot and fii calls - hitachi home zoomed 37 rs , indoco remedies rose 18%
Bharti 340 ca , idea 140 ca - doubled
