“Stock
markets are always right. Never time the market.”
– Rakesh
Jhunjunwala (Indian Billionaire, Business Magnate, Stock Trader, and Investor)
The market is
rallying consistently over March to July 2023, with Indian equities taking a
breather in August 2023. Nifty index fell 2.5% in August due to global slowdown
concerns and a sticky & persisting inflation, which remained above most of
the Central Bank’s target.
Key reasons
for negative fall in August:
- US
Treasury Yields touched an all time high on fears of further rate hikes – main
reason for fall in worldwide markets. - Driest
monsoon in India since 1901 in Aug, due to the influence of El Nino. - Crude
Oil crossed 90$ per barrel as Saudi made more voluntary production cuts. - FIIs
sold 20,620 Cr after 6 months of heavy buying.
Key reasons
for market rally in September:
- RBI
chose to keep rates unchanged in its policy review in August. Growth Focus
continues in policy direction. - Q1
result season: A tad better than expected. Nifty earnings grew 32% in 1QFY24, a
beat vs. expectations of 25%. - RBI
discontinued the Incremental Cash Reserve Ratio (I-CRR), which was put in place
to absorb surplus liquidity following the withdrawal of Rs 2,000 currency
notes, in a phased manner. Banks stocks rallied because of this decision. - India
remained the fastest growing economy with Q1 GDP at one year high of 7.8%.
Successful
G20 Delhi Declaration and
India’s diplomatic triumph triggered the continuation of the positive market
mood and momentum.
What to look
forward in September? Dark clouds are gathering.
- Rising
Oil Prices: Oil prices have risen 20% in last 3 months, expected to cross 100-dollar
mark again – a big negative for markets. - Below
par monsoon will impact rural consumption and will fuel food inflation. - Special
Parliament Session is called – Announcement of early elections will lead
uncertainty in markets. - US Fed
meet is on 20th September, another rate hike will put more pressure on markets
– expectations are of no change but with bullish commentary. - FIIs
after a consisting buying of 5 months have again become net sellers. Remember
our earlier articles – Higher Crude Price – FIIs exit.
September
Forecast: though markets
continued making all-time highs each day, global indicators cannot be ignored.
Being cautious at such times will be more sensible than waving the bull ride. We
recommend to park money in Debt funds at present and wait for more clarity in
Domestic as well as Global front in coming weeks/ months.
Happy
Investing!
