Posted at 11:25 AM , on April 21, 2015
After almost getting within striking distance of their all-time highs, the Nifty and Sensex fell vertically over the last 3 trading days of the week. Why exactly did they fall so rapidly and what were the triggers? There are 4 such triggers!
It is all about the ETFs…
Exchange Traded Funds (ETFs) are powerful global passive investors. Passive in the sense, they don’t bother about outperforming stocks, and specific stock performances. They just buy the index if they like a particular market. Since the beginning of March 2015, over 85% of the money that came in was in the form of passive ETF money. Just as the ETF buys all stocks in the index in the ratio, it does the same when selling. These ETFs are typically driven by news and valuations. Not surprisingly, they hit the 2 high/PE sectors viz. Pharma and Technology. To combine with rich valuations there was cross currency risk. Continue reading
Posted at 5:18 PM , on March 30, 2015
But, do investors need to panic, not necessarily!
The nifty is down close to 10% from its peak. Over the last 1 week there has been evident panic in the markets. The question is whether this is a normal correction or an indicator of something bigger? And what should investors do? Be opportunistic and buy on declines; or panic and rush for the exits?
India story is still intact…
You just can’t miss the irony behind the market correction. The Indian GDP is still likely to grow at 8% plus. Current account deficit and fiscal deficit will be under control. Forex reserves at $340 billion are at an all time high and so is FPI investment. Quarterly results may be below expectations but Indian companies are still growing in a deflationary world. Capital cycle is not reviving, but that was a good 3 years away. Nothing seems to have changed. Continue reading
Posted at 5:57 AM , on February 24, 2015
As the Nifty closes in on the 9000 mark, the standard question is what happens after that? Well, it is pointless trying to estimate the likely level of the Nifty but we can surely make a comparison with the last 2 market peaks of January 2008 and October 2010 to understand how the market compares. We will leave out the peaks of 2000 and 1994 as the markets are substantially different today compared to that period. Continue reading