May 26, 2024 | Read Online
The Magnificent 7 is now the Magnificent 3
Nvidia, Alphabet and Amazon
The Nifty closed in on 23,000 levels while all sections of the markets performed well
The rupee strengthened against the USD to close in on around 83 levels (This is generally a positive sign and indicator for equities is what we believe)
Unless there is a big negative surprise on the election front, we feel missing out on a post-election rally is a bigger risk than that of worrying about downsides especially in the short term
FII’s have continued their selling spree in this Calendar Year with more than 1 lakh crore of cash market sales
Thematic Funds
How much, when and if one should buy
Q. Can I hedge my portfolio by buying options or selling futures in the run up to the election results?
A.If you believe that the NDA / BJP would get less than 340/300 respectively, yes a hedge can make sense. Currently, the option premia is very high with the Put Option of 23000 Strike Price available at around 350 rupees which is not expensive if the above scenario plays out. (Check the premium out at https://www.nseindia.com/option-chain )
However, if you believe that the above isn’t happening, then the best would be to stay invested and ride the tide.
Also in case if going ahead with the hedge, please consider
The tax aspect as the return from an option gain is fully taxable
If you are a long-term investor with only investments as your primary activity, there are certain tax clauses that can make the tax department treat your investment income as business income ( Please consult your tax/ financial advisor here)
Lastly, option buying is a dead expense and post 6th June this premium would stand wasted if the Nifty is > 23000
Derivatives are complex and best done by experts on under expert guidance.
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