Positive Developments May Make Markets Less Volatile!

The recent developments, I am sure, will excite bulls more than the bears. The decline in crude oil prices, the US Federal Reserve hinting that the interest rates may not be hiked further, both US and China calling a tentative truce on the trade war front, factory activity in India at its 11-month high in November and Indian rupee finally showing some strength – these are some of the positive developments that will calm the markets’ nerves a little bit. In the current market scenario, these positives are like pain killers. 

I have been maintaining that the broader structure of our economy is solid and the markets will move in tandem with the economic growth in the long run. The FIIs cannot afford not to remain invested in the fastest growing economy in the world. We can expect the FIIs to pump in a lot more funds into India in the coming calendar year. On the earnings front, the outlook is positive and one can expect earnings to grow around 18 to 20 per cent in FY20, at least for Nifty 50 stocks. 

As far as election results are concerned, if the BJP loses 2 out of 3 states, we may see some knee-jerk reactions in the markets, but if the BJP manages to retain all the three states, the markets can take a nice leap northward. 

Our current issue is a banking special issue and we have shared our observations on this beleaguered sector. Banks have indeed underperformed in CY18. As in most businesses, digital business model seems to be the most important factor for banks as well. Do read our cover story for more details on the health of various banks and understand which banks created maximum wealth in the past decade. 

Right now, the mood of the market appears to be to move sideways. In such market conditions, using options trading strategies can generate some cash flow for the traders. In our detailed special story on options trading, we have discussed various mistakes that investors often make while trading in options and have also highlighted different options trading strategies that can be used in the current market situation. I am sure traders will enjoy reading our inputs and, more importantly, profit from it. 

Come elections, and media stocks are in the news. In our special report on the media sector, we have shared the past trend in media stocks and have discussed if it makes sense to include media stocks in the portfolio just because it is an election year. Do help us with your feedback on the story. 

Investors right now got to keep calm and refrain from being aggressive. In spite of the positive developments, the markets are in no hurry to move up. Sensex may trade in the range of 33,500 to 37,000 for some time. Hold on to those stocks where you believe the prospects are going to improve. 

If 2018 was the year for investments, 2019 could be the year for wealth creation. 

Happy Investing !