Saturday, August 17, 2019

light at the end of tunnel

Status of key problem of FII selling
FII's sold 14K Cr in July + 10K Cr in Aug .. (net of HDFC Life & Shriram deal)=24K Cr. Prev large selloff was in Oct 2018 ~30K Cr .. (~40-50K Cr upto Dec'18) .. so half way through? ..

Future events & Outlook
June quarter results have been mixed but upcoming September quarter results are expected to be worse based on mgmt commentary & concalls, production cuts, job losses .. so certainly there will be pressure on stocks until Sept qtr results are announced in October/November month. But because of all the production cuts inventories will clear up in the next 2 months .. many small and less efficient companies will get wiped out which will clear the competition. Govt has learnt it's lessons based on the updates from PMO & FMO so in future shocking disruptions will be low and it is expected that the govt will work with better understanding with Investors, FIIs & Industry instead of adopting a heavy handed non flexible, we don't care approach. On the other hand it is expected that the govt will provide some relief and stimulus packages to revive the economy. Another theory is about money moving from DMs to EMs before US elections in Nov 2020 still holds but I don't know when it will kick in. All this can lead to a trend reversal in Indian market after Oct/Nov but the selloff can continue or even intensify upto that time.



Strategy from here
I can see light at the end of the tunnel but I don't know how long the tunnel is. All I can say is that it is a few months long, less than a year.  I think this is the right time to prepare a list of portfolio stocks and accumulate in SIP mode atleast 12 instalments everytime we get a large selloff in the market. Basically on those 100 plus Nifty down days.


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