Nifty @ 22828
Bank Nifty @ 51002
Ever since this Financial Year has started – markets are down by three odd percent. Though the volatility has increased with Trump playing the hard ball with Tariff hikes and his negotiation tactics. The global event unfolded very fast and at the moment where we stand is that except for China Trump has ordered a flat 10% tariff hike. Initially, the way things were unfolding, the US recession was seeming to be a plausible outcome. But the point where it stands now, the case is more of a US slow down and not a recession. It seems that President Trump doesn’t want to crack the markets and that is why he agreed to give the world a 90 days window to negotiate the tariffs and find resolutions with the US.
What is being construed of the entire game plan is that – the Trump’s administration focus is on trade agreements and once they have made agreements with the rest of the world they will sit on the negotiation table with China.
With these rollbacks, the probability of a big crack on the stock market diminishes significantly. What we expect now is consolidation with reducing volatility over a period of next 2-3 months.
Trade war is the escalating now and the US slowdown will make the onus of stimulating on the rest of the world. India has already shifted its stance from neutral to accommodative and Europe is already a number of rate cuts ahead. The positive of this trade war fiasco is a world with free trade agreements.
Sectoral outperformance can come in from a few pockets of the markets especially Banking and financial services sector which are at good valuations.
Fund Choice & Strategy-
# Amidst the category of funds we continue to believe that Multi Asset Allocation Funds are well suited to allocate fresh money. Clients who are more conservative may choose to enter through a Systematic Transfer plan not exceeding 2-3 months.
# For Incremental Choice of SIPs- starting mid and small cap sips for next 2-3 years can make one benefit with rupee average costing significantly instead of trying to make the lumpsum purchase in mid and small cap funds.
# For those who are interested in precious metals – they may choose Gold Funds or Silver Funds or Gold and Silver Funds ( combined in 1 fund). However, we have recently introduced three MCX based Market Linked Debenture strategies to our clients. These Market linked debentures can also be evaluated for making allocation in Gold.
In case you wish to take the discussion ahead on any of the ideas presented above – please feel free to reach out to us and we would be happy to assist.