Why do FIIs have such an inordinate impact on equity markets?

From the time FIIs were permitted into the Indian markets, they have continued to influence the direction of the Nifty and the Sensex in a meaningful way. In fact, FII buying and selling has almost become like a veritable barometer to judge the direction and trajectory of the equity markets. Intuitively, if you were to look at the rallies and market crashes in the last 15 years, they are typically accompanied by aggressive FII buying and selling respectively. Even over a much shorter period, that situation continues to hold. Let us understand this FII phenomenon by focusing on the last 1 year of FII data and correlate with the market movements. Continue reading

Does India have to worry about Moody’s downgrading China…

Earlier in the week, rating agency Moody’s downgraded China’s sovereign rating by one notch from “AA3 to A1”. This is the first time that the sovereign rating of China has been downgraded in the last 3 decades. The last time the rating of China was downgraded was back in 1989 in the immediate aftermath of the Tiananmen Square massacre. The Chinese government back then had rolled heavy tanks over a student protest in Tiananmen Square in Beijing leading to the death of over 10,000 students. However, things changed drastically after that! Continue reading

How will the GST rates impact various sectors…

In May 2017, the GST Council announced rates for most of the goods and services. There are a handful of goods like gold, bidis and cigarettes where the final rates of GST will be announced during the June meeting of the GST Council. Broadly, the impact of GST on various sectors must be analysed along four broad lines. Remember, it is not just about rates… Continue reading

Why you must seriously consider ELSS for tax planning…

Over the last 3 years, mutual funds have seen a sharp inflow of funds. Interestingly, most of the inflows have come into equity funds and they have come from retail investors via SIPs. One of the sub-categories of equity funds is the equity linked savings schemes (ELSS). An ELSS is an equity fund which has a lock-in of 3 years and also proffers a tax benefit under Section 80C of the Income Tax Act. Here is why you must seriously consider ELSS for planning your taxes… Continue reading

Key takeaways from 3 Years of Modi Sarkar…

In the last week of May 2017, the ruling NDA government under Narendra Modi will complete 3 years in power. Over the last 3 years, the Nifty has given a Compounded Annual Growth Rate (CAGR) return of 9.8%. That is about what an investor would have earned in a debt fund over the same period. That means the equity markets have not really indulged in fireworks during the last 3 years. If you were to play the Devil’s advocate, you can argue that jobs creation has really slowed in the last 3 years and most of the benefits that we see today are an outcome of weak global crude oil prices. One can also argue that NPAs in the banking system have burgeoned sharply in the last 3 years and the PSU banks are a lot more brittle today than what they were 3 years ago. Continue reading

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