Sunday, January 10, 2016

China spooks the Markets

The markets lost 4.5 pc in the first week of January as fears over China slowing down led to world markets having a bad first week of January 2016. For long term investors, this is the best time to buy, if they believe in India.

1. The world markets were down and if the world markets are down, India follows suit. This is because FIIs have to pull out funds and they do basket selling. It is not as if there is a problem with India. They have pulled out 3300 crores in  the first week of Jan itself.

2. Crude oil prices are at 11 year lows which means the fiscal deficit will definitely be under control. The 7th Pay commission handouts will lead to rise in  the consumption story.

3. Gold has started inching up because of the fear factor but because of the long commodity cycles, gold will remain in a cyclical bear market for few years to come. Thanks to the rupee depreciating, Gold will continue to do well as an asset class.

4. The Results season will kick off in right earnest from the next week. Results month is usually a sideways to slightly negative month.

5. Large caps have seen a fall whereas mid caps are still flying high. The situation has to correct, and it is prudent to selectively book profits in mid caps which have given good returns so far.

6. 7500 is the next support for the market and 7200 after that. We hit a top of 9119 in the month of March and have completed 9 months of correction. 13 months of correction can follow so we may take out previous highs any time only after April 2016.

It is a time to buy and buy selectively. Buy quality names which you should be willing to buy even if the market goes down further.


  1. Whether Tata motors is still buy?
    Or wait for results?
    Is averaging of TAMO righr

  2. I am averaging from 400 onwards. Fundamentals do not change in a quarter or two.

    China losses being made up in UK