Markets In No Mood To Reward Bears, So Stay Bullish!

Once again markets have tested investors’ conviction as stock prices went down sharply only to bounce back, catching the bears on the wrong foot. This market is in no mood to reward the bears—that’s for sure! One can easily assess that the current upmove in the stock prices in India is due to the sovereign rating upgrade by Moody’s. What is more interesting is to understand why the rating has been upgraded and how it is going to help India. The ratings have been upgraded after a long gap of 13 years and it may not be a pure coincidence that 13 years ago it was the BJP government that was at the helm at the Centre. It is tempting for me to say at this juncture that the sovereign ratings have some relation with the kind of economic policies that the government at the Centre formulates and implements. The current BJP government has that growth-conducive vision and execution capabilities that puts India on the right growth track which is recognised by the international investors and rating agencies, but all of this goes unnoticed by many Indian citizens. 

The fundamentals are strong for India and the back-to-back reforms is what has prompted Moody’s to upgrade India’s rating from Baa2 to Baa3. The interest rates are expected to come down over the next few quarters and this in turn will not only help the Indian economy to grow faster but also enable the companies to post higher profits. Markets are in good shape and they will continue to remain in good shape, notwithstanding some minor corrections here and there. Do not lose focus on the larger market uptrend, which is backed by abundant liquidity that is evolving in India as we speak. The corporate results this season were better than estimated and the upcoming quarter is expected to be even better. 

With markets scaling new highs, it is obvious that smart long-term investors are sitting on hefty gains. It may be prudent to protect your profits from market corrections—not that we foresee any major ones. We have in our cover story spoken at length on short selling techniques and how best to use these shorting techniques to not only protect profits but also to enhance gains. 

Crude oil has dominated the headlines lately and indeed higher crude oil prices may derail the progress India has made on several fronts. However, the strengthening Indian rupee is expected to negate the crude oil damage to an extent. Do let us know your views on our observations on crude oil prices and their impact on equity prices. 

Cryptocurrencies are something that are occupying traders’ mind a lot these days and hence we thought it would be useful for our investor-reader friends to come out with our own assessment on one of the most complicated digital assets called Bitcoin, a cryptocurrency that has created wealth for speculators. I am sure you will enjoy reading on such a fresh topic. 

Accumulate select PSU banking stocks and stocks in the logistics space. Avoid companies that have taken huge loans and also avoid investing in those IPOs where the promoters and large shareholders are offloading their stakes as we have observed that the recent IPOs that have hit the markets have not raised the capital for the company’s growth but were launched merely to facilitate offloading of stakes by promoters and large investors. 

Stay bullish with reasonable expectations from the markets!