Action Time For Traders & Wait And Watch For Investors
To begin with, I must say that the market conditions are looking better than they were 15 days ago. The contribution from the banking sector and the widening of market breadth has added to the positivity. Overall, there is bullishness in global equities too as a stimulus is expected to be announced in US’ economy. Positive economic data, expectation of stimulus in the US, low interest rate regime, ample liquidity and the pandemic situation under control are the major factors driving this positive sentiment in Indian markets. We believe the next one-two months are going to keep the market very volatile with wild fluctuations.
This scenario would be a good playing field for the traders as they take very short-term positions and exit promptly. For investors, we would suggest avoiding any hasty decisions. It would be best to watch patiently through this phase. Yes, do book profits where the stock prices have skyrocketed. Be choosy while buying into companies. Let this euphoria of US’ elections and stimulus settle down.
The number of stocks that hit 52-week highs in September has increased and is indicative of the improving market breadth. To understand market breadth and how the breadth indicators can be used profitably, we have come up with a cover story on ‘market breadth indicators’. I am sure you will enjoy the knowledge provided by our experts on using such indicators. Meanwhile, the IPO markets in 2020 have surprised everyone with stellar listing gains. To know more on this, read our special story on IPO markets that also provides an outlook for IPO markets going forward.
Further, investors often get confused about what action is required to be taken when the stocks get featured on the Additional Surveillance Mechanism (ASM) list. Does the performance get impacted once the stock is under surveillance? How does one deal with such ASM stocks and for which category of investors are these not a good idea? Find answers to all these questions in our special story on ASM stocks.
Lastly, I would like to mention a big development SEBI has rolled out from October 1, 2020. This is to properly align the roles of advisors (who give investment advice) and distributors (who get commission on selling MF and financial products) in the country. Basically, clients of SEBI registered entities, who wish to take advisory services will not be eligible for availing their distribution services. Similarly, clients who wish to take distribution services will not be eligible for availing their advisory services. This was a much-needed move by SEBI in the interest of investors since many investors were getting misled by distributors giving biased advisory services with the sole purpose of making themselves richer. I am glad to let our readers know and feel proud that their DSIJ brand has always maintained this fiduciary responsibility and stuck to being a neutral advisory house by staying away from conflicting activities like distribution of financial products or execution for brokerage, however lucrative they appeared to business expansion and growth.
To conclude on the market front, until the US election unfolds, it is action time for traders and a wait-and-watch phase for investors. Stay safe, stay tuned.
RAJESH V PADODE
Managing Director & Editor