November 19, 2019
4.8.2017
“With the new day comes new strength and new thoughts.” – Eleanor Roosevelt
And sometimes new worries, a new stress. Stock markets today are trading lower and at the time of writing of this note are down by about .7% from Friday’s close. This weakness is attributed to nuclear test conducted by North Korea. Prior to this we show dismal numbers of GDP growth of first quarter on late Thursday. GDP growth rate has been declining for last six quarters. Many people thought that markets will plunge on Friday triggering much awaited correction in markets. That did not happen, in fact market bounced back on the news of PMI (purchase manager’s index – to gauge manufacturing activity) data for the month of August being much above the expectations of managers. Markets in short term always behave like this and sometimes are irrational in its behavior.
A lot of hype and fear was created around GST. And it was one of the main reasons of lower manufacturing and trading activities in past two quarters. All were busy in just clearing the inventories before the roll out of the GST. Now with two months into the GST regime and filing of first month’s returns, lot of clarity is being given by government and it’s responses to resolve the issues has brought confidence into the system. The same is reflected in PMI index for the month of the August.
Macroeconomic factors have been good with decent monsoon, low inflation, soaring government revenues, lower crude prices, easy money flowing into the markets, rising foreign exchange reserves, reviving global economy etc. Present government’s continuous efforts to improve efficiency of the system and reforming the regulations to provide for a much conducive environment to conduct businesses emboldens the belief that our economy is on right track and despite the dismal numbers for last quarter, is much better performing economy in the world.
For the present September month may not see much activity. But October is poised for many events. In October RBI will come out with its bi-monthly monetary policy. We will see companies declaring their second quarter’s results and first after implementation of GST. Then festival season with Diwali’s muhurt trading though customary but will be interesting to see. We at InvestmentMitra believe markets should move with positive bias from there.
Maintaining good asset allocation is the key to make optimum returns from the market and keeping yourself immune to market noises is the key to success in equity markets.
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