Ahoy Results! Stock Specific Approach To Gain Credence Now!
Indian markets welcomed the New Year with new hopes, as the improving market breadth, good GST collection and improved PMI data was seen lifting sentiments of the market participants. Most of the factors turned rosy and just when everyone on the street was hoping for a fresh all-time high, suddenly, out-of-the blue, a major twist came, and the markets were knocked off their perch. As a result, the party of fresh all-time high which the market thought will happen soon got postponed. Throughout the week, the Indian markets continued to ride the global cues, which were being driven more by geopolitical than economics. A possible military stand-off between the US and Iran kept the markets on their toes.
As the rising tensions in Middle East attained a centre stage, the monster of volatility came back to haunt the markets as it surged with full force. The volatility gauge, Indian VIX jumped to levels of 16.39 on January 8 from a low of 10.73 on January 2. However, volatility has cooled off as US President Trump chose to de-escalate with no new military action in response to Tehran’s missile attacks on US forces in Iraq. This move of US President Donald Trump should help the Indian markets more than anybody else as the rupee heaves a sigh of relief and crude oil price, which were on boil, surged to 4 month high and is now back in the barracks to touch $ 60 mark.
As per the popular saying, ‘One man’s loss is another man’s gain’. The same applies in investing world as well when the investors are in risk-on sentiment equities, it is a preferred bet, but when the investors are in risk-off sentiment, yellow metal is the preferred investment bet. With the rising tension between US and Iran, the gold which is usually safe whenever there is any geopolitical tension, was again in the reckoning. As a result in the domestic markets, the Gold February futures hit a fresh record high on January 8 and in the international market, it surged past $ 1,600 an ounce mark.
In the recent move, government has approved an ordinance that has opened up the coal sector by removing the end-use restrictions. This initiative will have a major implication on the economy.
During the week, the government has released the first advance estimates of the GDP for FY20 and is pegged at 5 per cent, down from 6.8 per cent in the year-ago period and the World Bank lowered its growth estimate for India to 5 per cent for the current fiscal from the earlier projection of 6 per cent. This is not shocking given that the first half of the fiscal year has already gone by with a growth rate of just 4.8 per cent.
In the coming days, the focus seems to shift towards corporate results and a stock specific approach will now gain credence. The factors which had kept the performance of corporate India muted have not changed much over the past three months. Yet, expectation of some improvement in the overall financial status of companies, on the back of revival, is seen in the festive season and the corporate tax cut will keep investors hooked on to the numbers. Here is some of the other catalyst which would command attention at D-Street in the coming days which is IIP numbers and President Donald Trump would sign a phaseone trade deal with China on January 15.
So now that we have an air of uncertainty cleared between US and Iran, we expect markets to climb higher and reclaim its all-time high level soon. But, for the coming stock, specific action would dominate D-Street.
