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COVID  PANDEMIC  TAINTED  DIWALI . . .

The SAMVAT 2076  started  pinning hopes on FESTIVE SEASON for a strong economic recovery. But … festive season played out below par and economy was sulking even more in 3^rd and 4^th quarter FY20.

During this time, the market moved to all time high by mid January 2020 hitting 12400 + levels. BANKNIFTY was on a roll and hit a level of 32000+ in mid-December.

AFTER MID JANUARY THE MARKET STARTED SLIPPING CONTINUOUSLY FOR 4 WEEKS  AS  IF  IT  WAS ACCEPTING  THE ECONOMIC REALITY.

 Dark Covid clouds were gathering on the horizon in February  but INDIA was basking in the euphoria of the President Trump’s visit - ignoring the early warnings.  THEN ALL HELL BROKE LOOSE IN FIRST WEEK OF MARCH … NIFTY CRASHED 3000+ POINTS IN A SPACE OF 4 WEEKS HITTING 5 YEAR LOW OF 7510.

Recovery also has been dramatic and as I am writing now on 11^th November, NIFTY HAS HIT ANOTHER ALL TIME HIGH OF 12767.   ECONOMY IS LIMPING BACK TO NORMALCY BUT THE ABUNDANT LIQUIDITY CREATED BY THE WESTERN GOVERNMENTS – PARTICULARALY  USA – HAS DONE THE TRICK.

Valuations of EQUITIES AS WELL AS PRECIOUS METALS   have gone thru the roof  - regardless of geography  – as billions of dollars are pouring in  day after day.

RBI has also loosened the purse strings and government – which is cash strapped – has provided easy loans for the needy sectors.  MORATORIUM WAS GIVEN TO ALL AND SUNDRY - FOR 6 MONTHS  - TO TIDE OVER DIIFICULT TIME AS BUSINESSES CAME TO A STANDSTILL DURING LOCK-DOWN. 

As per SUPREME COURT  order, any NPAs resulting out of this moratorium repayments are not to be counted till the SC order.  SO WE HAVE TO WAIT AND WATCH till  December end results to know the actual / real NPA position.

FIRST TWO QUARTERS HAVE NOT MATCHED THE PREVIOUS HALF YEARLY PERFORMANCE FOR MOST COMPANIES. ONLY SOME SUPERLATIVE PERFORMANCE IN THIRD AND FOURTH QUARTER + THE BASE EFFECT OF POOR PERFORMANCE LAST YEAR, MAY HELP COMPANIES TO ACHIEVE “ON PAR”  ANNUAL PERFORMANCE.

Personally, I am not very hopeful  about FESTIVE SEASON as one can see gloom and doom all around. The  government pensioners and employees of the large corporates have escaped scot free  - without any loss of employment or reduced salary. But that is not even 7/8 % of the population while the other 70 %  – particularly unorganized sector + daily wage earners + small businessman -  are really struggling to make two ends meet and may not have a  VERY  ENJOYABLE  AND PROSPEROUS  DIWALI.

The MUTUAL FUNDS have given very moderate returns over 5 year time-frame in spite of bumper 20 % returns in SAMVAT 2073. I think 5 year is long enough time for MFs to perform.   LET US SEE WHAT IS IN STORE FOR SAMVAT 2077.

I AM NOT MAKING ANY PREDICTIONS FOR THE COMING SAMVAT SINCE SO MANY VARIABLES  - EACH PLAYING  DIFFERENT WAY – MAKES GUESSING VERY VERY DIFFICULT.   

ONE THING IS CERTAIN, THE ABUNDANT LIQUIDITY  WILL BE THE MAIN SAVIOUR FOR THE BULLS RATHER THAN CORPORATE PERFORMANCE.

As you know, I am a very conservative person and I PREFER TO BE SAFE THAN SORRY. For me,  money in the bank matters more than the paper profits.

Pl find below my annual trading levels for INDICES / US  INDICES / GOLD / SILVER + large nifty stocks.  I HOPE THESE LEVELS WILL GIVE YOU SOME GUIDANCE IN YOUR  INVESTMENT  ACTIVITIES.

WISHING YOU

A VERY HAPPY

AND

PROSPEROUS

SAMVAT 2077

MADHAV RANADE

WILL WE HIT A NEW ALL TIME  HIGH IN THIS  WEEK ITSELF  ? ? ?

Trading  levels  9^th / 13^th  November    2020

I  WROTE THIS LAST WEEK …

By Wednesday 4^th Nov morning, we should know who will be the next USA president. I expect a minimum 5 % swing depending on the outcome. The individual stocks will move 10/12 % easily.

WAS THIS NOT PROPHETIC ?   our market – went up by 5.5 % and we were underperformers in the world markets. Many markets went up by 7/8/10 %.

The marketmen have concluded that a minimum of 2 trillion dollars of fiscal stimulus will be announced soon.  

This time the stimulus announced by the American govt is nearly 3 to 4 times compared to what was announced in 2008 crisis.  This has pushed all the asset classes much much higher than anybody could imagine.

I still maintain, that we will not  beat our FY20 earnings in FY 21, but our market may be even 10 % higher than all time high hit in FY20. WE WILL HAVE NEGATIVE FY21 GDP BUT THE MARKET MAY BE AT A NEW ALL TIME HIGH IN MARCH 21.

THIS IS THE MAGIC OF INFINITE ABUNDANT LIQUIDITY WHICH WILL BE CHASING FINITE ASSETS AND THEN THE VALUATIONS CAN BECOME 30/40/50 % HIGHER.

Continue to enjoy the party as long as the music goes on …. 

I had earlier talked about negative divergences on daily and weekly charts. Most of the daily divergences have got negated. But negative divergences on weekly charts have infact got stronger. Let us see when they will  show their hand.

MORE AND MORE INDIANS ARE NOW LOOKING TO DIVERSIFY BY INVESTING OUTSIDE INDIA AND ALSO IN PHYSICAL ASSETS LIKE GOLD AND SILVER. KEEPING THAT IN MIND, I HV STARTED FROM TODAY GIVING WEEKLY LEVELS FOR US INDICES / GOLD AND SILVER. I HOE THESE WILL BE USEFULL.

Indices  weekly  levels