July 14, 2024   |   Read Online

Earnings growth Vs Profit growth of Nifty 50 sectors

Profit outpaces stock prices - Banking and financial services and auto

Stock prices outpaced profit growth  - Others, logistics, utilities, capital goods, metals

• Markets managed to hold on to its last week closing despite several apprehensions on curbs on derivatives by the regulator and/or in the upcoming budget

• Big tech continues to soar, and despite a correction on Friday they are higher than last week’s closing (Nasdaq)

• Online SGB prices have soared up to a big premium to the spot prices, possibly on the delay of a new issue announcement. We recommend to not buy at such high premia

• Rumours suggest that the upcoming budget might stop the tax benefits enjoyed by arbitrage funds (Make hay while the sun shines on temporary funds not needed for >3 months as we have been suggesting to our users)

• Railway stocks soar to catastrophic levels and stock prices seem to have moved substantially ahead of fundamentals in some cases

• TCS results were a tad better than estimates as the stock charged, however we continue to believe that IT services is a valuation gap play (A 20% upside) and not a structural growth/buy and hold like olden days

• Some interesting articles below on how India checkmated China, the paradox of learning, and a short blurb of our founder on how GoalTeller helps you manage your finances

• Our views on how to play the markets at such levels and pre budget in our Question of the Week below

How to play the markets in the current context and leading upto the budget + Twitter spaces summary

Our Answer:

As we approach the budget, a lot of speculation continues to drive the markets as individuals are confused whether to continue and ride the tide or stay away. The government surely seems to think it a responsibility to curb excessive speculation.

One definitive sign is that the government wishes to curb F&O trading and could come out with various regulations including increase of lot sizes which will substantially reduce volume, curb speculation, but at least in the short term lead to a market fall and maybe cascade into a crash as well.

In our X space earlier this week, we did highlight that as we approach the budget and also the earnings season we have:

a) Expected regulatory changes in futures and options that may have short-term market impact but long-term benefits
b) Some market segments, particularly certain PSUs and small/mid-caps, are highly overvalued
c) Private banks and low volatility stocks offer good value from a risk-return perspective
d) Investing in technology should be treated as a defensive bet rather than high-growth
e) Power and infrastructure sectors show potential, but require a very long term investment horizon
f) Proper utilization of HUF and NPS can provide significant tax advantages

Liquidity continues to be super strong with MF's sitting on piles of cash, however we recommend:
a) If any moneys are parked into equities for short term goals ( < 12 months especially) please move them into debt, equity savings funds to derisk from equity markets
b) Continue your SIP's
c) Continue STP's at least until the budget
d) Keep liquidity handy in the bank a/c ( not liquid but bank a/c)  for any post budget dip

Though markets seldom correct when expected, we need to play the game that is best suited to us and hence we advise to stay invested, avoid investments for short term periods and stay clear of overheated pockets.

• Equity inflows at 40k crores in June alone - Read More

• India’s GEM portal to become the largest globally in a couple of years - Read More

• HDFC Bank - Read More

• How India checkmated China on Silver imports - Read More

• US Inflation falls for the first time since the pandemic - Read More

• The paradox of lessons - Read More

• TCS shares jump - Read More

Our founder with renowned anchor Sonia Shenoy on how GoalTeller can help manage an individuals finances better, cheaper and stronger

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