Sunday, June 19, 2016

DON'T FRET OVER REXIT OR EVEN BREXIT, MARKETS ARE FINE!!



WHY STOCK MARKETS WILL MOVE ON

I was in 2 minds about the conclusion of my thoughts on markets post Rajan till 30 minutes back. That is when I decided to go for a walk and by the time I was back, I was fairly certain about what I was going to write. It rained cats and dogs and it still is while I write this. So makes my job easier.

First things first – The only reason anyone should even fret about Rajan exit was because of its timing. It couldn’t have come at more uncertain time with market already bracing itself for the Brexit vote and some renewed uncertainty over the progress of monsoon.

If this was 2015 second half or first 2 months of 2016 when the stock market went through a cyclical bear phase, I wouldn’t have ben surprised by a 300 point Nifty fall. However, things are different now. This is a market in which smart money is so hungry for bad news (so that it gets an opportunity to buy cheap) that the first major correction (if any) will be lapped up by both hands.

The best example of what I am saying was the market’s reaction to the changes in P notes regulations, which the market forgot in a matter of 45 minutes. Last year, the market was making lower highs and lows on the day of good news. This year, the market is making higher highs and lows on the day bad news hits it. In stock markets, you don’t argue with the tape. It’s telling you something

So what makes me so bullish and comfortable on the state of markets? Let me go back to the opening para – the rains. The monsoon is THE MOST IMPORTANT trigger this year for us and if we get a normal monsoon, then you will find (with benefit of hindsight) that REXIT was a great buying opportunity.

After-all, RBI as an institution is way bigger than any individual. Yes, Rajan has done a good job in RBI's war on bad assets and crony capitalism but there is no reason to believe that his replacement will do any different. On the other hands, if the new governor leads to even slightly easier monetary policy, the market will get one more catalyst for a rally. 

Now, the next important trigger this week would be BREXIT. If Britain decided to stay within Euro zone, all markets are poised for a big rally and India would be part of that. If however, the dreaded BREXIT does take place, then again I will repeat the same point. If the monsoon is good, you will find that BREXIT was once in a lifetime opportunity to accumulate stocks.

For tomorrow, trade with caution – Buy any significantly big dips in good stocks and be prepared for a mark to market of 10-15% and don’t be afraid to buy more if that happens. I don't see this market moving anywhere lower than 7800 in a worst case scenario. The way I see it, if we have a good monsoon, this market is on course to hit a new all-time high at some point in Oct-Dec quarter.

Disclaimer: The author of this article does not invest/trade in stock markets including derivatives. His only exposure to stock markets is via the stock options given to him by his employers as part of his compensation



21 comments:

  1. Very well written and totally agree

    ReplyDelete
  2. I AM A BIG FAN OF YOU ANUJ ..CLEARLY AGREE WITH YOU..

    ReplyDelete
  3. Agree on the initial market reaction. It may be an opportunity to buy.

    However, I still worry about the FCNR outflow that will happen after Rajan's exit. There is no doubt that this unknown could cause volatility in the markets.

    Also the way Rajan has gone about expanding the RBI balance sheet has made the Indian economy vulnerable to inflationary pressures.

    ReplyDelete
  4. very well written, hope to see stronger market like wise

    ReplyDelete
  5. Define the word clearity ..
    Clearity = Anuj singhal
    Totally agreed with your view and logic behind every statment..
    #respect

    ReplyDelete
  6. Well written, ASI index is showing clear picture

    ReplyDelete
  7. Agree with you Anuj... Have to add only GST point.. If it is passed without any negative element then it can also cheer the market... No organisation stops moving after departure of an individual... The cleaning up of banks'balance sheets became possible bcz of Govt wanting same.. Otherwise PSU banks would have been cleaned up in early 2014 only before Modi Govt coming into power.

    ReplyDelete
  8. Few veteran investors are of view that if monsoon is good this year, Bull run is going to continue for next two years in India.

    ReplyDelete
  9. Few veteran investors are of view that if monsoon is good this year, Bull run is going to continue for next two years in India.

    ReplyDelete
  10. I could see all of u anchors had a knee jerk reaction and I was surprised to see that u people are so much experienced still u get so excited because of news like RExit, but after ur walk atleast u are settled now

    ReplyDelete
  11. I could see all of u anchors had a knee jerk reaction and I was surprised to see that u people are so much experienced still u get so excited because of news like RExit, but after ur walk atleast u are settled now

    ReplyDelete
  12. Rajan himself wud buy dollars to convert his Rs earnings, so rupee will fall and some of his friends who will go who had come because of him, but he was only one amongst the chain of the people and he will be easily replaced by someone without any issue. India story if any can't be dependent on RBI gov, if it is so then India story doesn't exist.

    ReplyDelete
  13. Rajan himself wud buy dollars to convert his Rs earnings, so rupee will fall and some of his friends who will go who had come because of him, but he was only one amongst the chain of the people and he will be easily replaced by someone without any issue. India story if any can't be dependent on RBI gov, if it is so then India story doesn't exist.

    ReplyDelete
  14. But the babies around you are eith too happy or too sad!
    Maneac depressive psychosis

    ReplyDelete
  15. Dear Anuj,Ur knowledge is fantastic.If possbile we would like to know how to gain this knowledge.If u write something about how u started and how u come up till here its a learning experience to all of us.Godbless.TC.

    ReplyDelete
    Replies
    1. Thank you. I attribute it to the training I got under my mentor.

      Delete
  16. Nice article Anuj. I follow u on CNBC daily. Sometimes people on your channel compared Brexit to 2008-09 crash but your article is completely different from what all have been spoken on your channel.

    ReplyDelete
  17. Just an out of syllabus question :). where is Latha venkatesh. Haven't seen her from many days on your channel

    ReplyDelete
  18. Hello Everybody,
    My name is Mrs Sharon Sim. I live in Singapore and i am a happy woman today? and i told my self that any lender that rescue my family from our poor situation, i will refer any person that is looking for loan to him, he gave me happiness to me and my family, i was in need of a loan of S$250,000.00 to start my life all over as i am a single mother with 3 kids I met this honest and GOD fearing man loan lender that help me with a loan of S$250,000.00 SG. Dollar, he is a GOD fearing man, if you are in need of loan and you will pay back the loan please contact him tell him that is Mrs Sharon, that refer you to him. contact Dr Purva Pius,via email:(urgentloan22@gmail.com) Thank you.

    BORROWERS APPLICATION DETAILS


    1. Name Of Applicant in Full:……..
    2. Telephone Numbers:……….
    3. Address and Location:…….
    4. Amount in request………..
    5. Repayment Period:………..
    6. Purpose Of Loan………….
    7. country…………………
    8. phone…………………..
    9. occupation………………
    10.age/sex…………………
    11.Monthly Income…………..
    12.Email……………..

    Regards.
    Managements
    Email Kindly Contact: urgentloan22@gmail.com

    ReplyDelete
  19. I am also dealing in stock market and provide Stock Cash Premium service to investors.

    ReplyDelete