Markets Overreacting To Trade War Fears

The markets so far have reacted quite negatively to the fears of trade war. On the face of it, the announcements made by US President Donald Trump do sound terrible for the world trade; however, if one analyses what is happening in the US, one will understand that Trump simply intends to balance the trade equation with China a little bit. He has not declared any ‘trade war’ with the rest of the world. He is basically acting in the best interest of his country and I do not think that his decisions will create a turmoil in global trade and that his decisions will push the world economy into recession, as is touted by a few economists. I think Trump is a smart businessman and he is using his pragmatic negotiation skills for the benefit of his nation. He has risen to be the President of the most powerful country in the world after having declared bankruptcy for his firms almost six times. There is some madness in his method and markets are finding it difficult to decipher his true intentions.

In my view, the trade war worries are untenable and the markets will start focusing on other factors and issues that genuinely impact specific businesses. Our markets were down as HNIs were heavy sellers in the market owing to the LTCG factor. The FIIs and the DIIs remained net buyers into the market in the past couple of weeks even as the stock prices tumble. Going ahead, I believe the markets should improve in terms of sentiment and some good amount of buying will resume starting April 1.

One should focus on banks as I believe the worst has been factored into the stock prices of banks. Select PSU banks and private banks should be part of one’s portfolio. The private banks in my view should grab market share from PSU banks in the long term and hence there is growth visibility for private banks. One should explore opportunities in pharma and infrastructure space as I see some good opportunities emerging in these sectors.

Indeed, the recent market correction has created mouth-watering opportunities in mid-caps and I believe long term investors can focus on this space for some outperformance of their portfolio.

I am excited to share with you a list of top 250 mid-cap stocks in this special edition. Know our views on mid-cap stocks in the cover story, which also brings to you experts’ views on mid-caps.

To understand what exactly happened in the PNB scam and whether more such scams are possible in the banking sector, read our detailed story on one of the biggest frauds in banking sector that shook the investing world.

We have also expressed our views on the gem and jewellery stocks in our separate special story, which also talks about the past performance of the sector. Have a look to know what lies in store for the sector.

When the time is tough for the markets, the only success mantra is to identify strongest possible set of stocks for your portfolio. No innovation is required in such volatile times. Staying calm and focused will more than do the job for investors in such a ‘noisy’ milieu. Stay invested in high conviction stocks, and remember – no leverage trading.

Happy Investing!