Friday, June 24, 2022

Where are we right now in terms of market cycle?

Globally - The last quarter of the US is negative GDP growth  

US is about to enter into a technical recession as last quarter was negative GDP growth and this quarter may again be negative


Is India decoupled significantly - Yes to a large extent but some sectors are strongly coupled such as IT

  1. Young population
  2. Consumption-driven economy
  3. Large RBI chest - If RBI doesn't defend INR


So, everything depends on how fast the mop-up of liquidity happens by regulators? The froth of liquidity is still very high. So, what are good indicators of this speed? 

Leading indicators, not lagging indicators - -Keep a tab on Fed Balance Sheet as well as other important global peers


Which sectors will be bad to enter into ?

Discretionary (high beta) - Banking, IT, 4 wheeler


Good to enter

  1. Consumption - 2-wheeler, staples 
  2. Value-Oriented sectors - Pharma, Energy, 


If inflation still remains out of control - Gold is good insurance against global turmoil

Demand for real estate will definitely go down with the recession but part of this will be countered with the inflation froth





When will redemptions of SIP start happening?

 Retail investors have been holding hard by continuously pumping in money when the FIIs have been withdrawing in FY 21-22.

FII flows started a negative trend started on Oct 21 but the DIIs were on an upward trend. Hence, the market has not gone down substantially. 

But the cracks in the DII story has started, 



 

The first to be impacted will be the Non-MF DII Inflows. These are basically retail investors, who are directly investing in the stock market by buying shares.

 

These are basically inexperienced people catching a falling knife



 

They have done buying at very high valuations. They have already burnt their fingers. They will basically start evaluating their returns and perhaps will start panic selling about 1 year from the highs of say Oct 21. So, that panic selling may start say around Aug-Sep.

 

But the real question is when the redemptions in SIPs will happen. Experts say – Never.

But the cracks already started in the SIP story as the May 22 inflows are lower than April -22.


Update - FII are again net sellers this week

https://www.indiainfoline.com/article/news-top-story/weekly-round-up-of-indian-equity-markets-122062400140_1.html

Keep a tab on the volume of transactions in market - Especially ratio of Retail / Institutional transactions



Saturday, June 18, 2022

Nifty PE at 18.92 - just moments away from my Aha moment

 

 I have been sleeping and yawning for a long time, but have become very busy for the last 1 month. 

All my triggers are now sending me emails and alerts - WAKE UP LUCKY, IT's TIME TO WAKE UP

 

Yes, PE has gone closer to my target range for long-awaited market entry. 



2013 – I was out of India and busy with hectic international travels across Asia. My only engagement outside the family in India was AAP moment and supporting the volunteers on the ground

 

2016 – I shifted to India and was busy with the hustle

 

2020 – It happened so fast that I could not make my Hypothesis for investment

 

This time around I am totally free and eager to get my hands dirty


Questions - How long it will take the US to mop up the money back? Interest rates are required to be significantly higher than the inflation rates. 

If the interest rates are increased significantly 

Debt - Huge MTM losses (long-term debt will be loss-making as interest rates will go up)

Gold - If inflation cools down then it may go down but for the moment, it seems unlikely that inflation will decrease soon, so gold may remain inflated for some period

Real Estate - May stay inflated for a longer period as mop-up is not so easy 

Excess liquidity has to settle somehow - The question is speed and speed is decided by regulators not the markets, so bottle cap tightening is out of market scope



Saturday, June 11, 2022

Portfolio Plan with PE at 20

 PE = 20, https://primeinvestor.in/nifty-pe-ratio/

market may have a trailing effect 

My threshold is 18-19 to touch equity, but I have to start somewhere, 

so I will begin my build-up game

Where to start? 

Index-linked direct plans, as I don't have time


Debt 


Indian Railway Finance Ltd                          7.61%

National Savings Certificate (VIII Issue) 6.80%

SBI Regular Income Corporate Bond            6.34%

5 Year Time Deposit on Indian Post          6.70%

Kisan Vikas Patra​​                  6.90%

Indian Oil                                                        6.14%


Source - Bondskart.com