Geojit Financial Services Ltd

💼There are both headwinds and tailwinds for the market now. 💼Headwinds are coming from the escalation of the geopolitical tensions in the Middle East and Ukraine. 💼Brent crude has shot up above $ 81. The strongest tail wind comes from the expected rate cuts by the Fed which will spill over to other central banks including the RBI. 💼Indian economy now needs monetary stimulus through rate cuts and this is likely in the next policy meet. 💼If geopolitical tensions cause dips in the market, DIIs and retail investors are likely to buy that dip. 💼Financials, particularly banking and other rate sensitives like housing and automobiles are the likely preferred sectors for institutional buying. 💼Investors can use weakness in the market to buy leading banking stocks and other rate sensitives in these segments. Segments like paints, adhesives and tyres which use crude as inputs will turn weak. . . . #StockMarket #inflation #EconomicOutlook #MarketUpdate #InvestmentOpportunity #EmergingMarkets #StockMarket #inflation #EconomicOutlook #MarketUpdate #InvestmentOpportunity #EmergingMarkets

💼The Fed chief Powell’s clear message of the beginning of the rate cutting cycle will impart further resilience to the ongoing global rally in stock markets. 💼Deviating from his usual cautious messaging, this time Powell unambiguously stated that “the time has come for policy to adjust” and that “the direction of travel is clear.” 💼This will act as sort of a “Powell put” similar to the famous “Greenspan put” that supported US equity markets during the Greesnspan era. 💼Form the Indian market perspective, this is significant since it will strengthen the minority view espoused by the two independent members of the MPC in favour of rate cuts in the last monetary policy meet. 💼Since core inflation in India is only 3% and economic growth is turning slightly sluggish, the MPC is likely to cut rates by 25 bp in the next meeting, The consequent rise in bond prices will be positive for banks, which present good buying opportunity, since valuations are fair. 💼On the flip side, worsening of the Israel-Hezbollah tensions may have negative impact, if the situation worsens further. . . . #StockMarket #inflation #EconomicOutlook #MarketUpdate #InvestmentOpportunity #EmergingMarkets #StockMarket #inflation #EconomicOutlook #MarketUpdate #InvestmentOpportunity #EmergingMarkets

💼Market is witnessing significant sectoral churning. 💼The PSU stocks rally which gave excellent returns in recent months is losing steam. For PSU banking stocks, the turnaround story which took the PSU banks from losses of Rs 87000 crores in FY 2018 to profits of Rs 1.41 lakh crores in FY 2024 is over. 💼But the valuation of this segment is still attractive. 💼Defence and many railway stocks have good growth prospects but the valuations in most cases had run ahead of fundamentals, warranting a correction which has been happening recently. 💼Money is moving into private sector financials where valuations are fair and attractive in this market which doesn’t have valuation comfort. This churning is fundamentally sound. 💼Globally the market’s focus today will be on Jerome Powell’s comments at Jackson Hole on the economy and the possible rate cut trend. Powell is likely to sound dovish indicating rate cut in September. . . . #StockMarket #inflation #EconomicOutlook #MarketUpdate #InvestmentOpportunity #EmergingMarkets #StockMarket #inflation #EconomicOutlook #MarketUpdate #InvestmentOpportunity #EmergingMarkets

💼Latest US jobs data for the 12 months ending March 2024 shows additional jobs generated lower than estimated earlier. 💼The implication of this significant data is that it makes the path to Fed rate cuts clearer. 💼The most likely scenario now is a Fed turning dovish and starting the rate cut cycle with a 25 bp rate cut in September indicating further cuts to follow. 💼This can keep the markets stable since the room for uncertainty is coming down. 💼The declining trend in the dollar continues with the dollar index at 101.14 facilitating further firming up of gold. 💼This, in turn, is positive for gold jewellery business and gold loan lenders. The valuations of the latter are fair. 💼In institutional activity the trend of sustained buying by DIIs and sustained selling by FIIs continues. But the intensity of FII selling is declining. 💼Retail investors are likely to continue with the buy on dips strategy which has been a consistently successful strategy in this bull market. . . . #StockMarket #inflation #EconomicOutlook #MarketUpdate #InvestmentOpportunity #EmergingMarkets #StockMarket #inflation #EconomicOutlook #MarketUpdate #InvestmentOpportunity #EmergingMarkets

💼An important trend in the market now is the shift in market preferences from overvalued segments to fairly valued segments. 💼Attractively valued financials are witnessing value buying and overvalued segments like railways and defence- related stocks are witnessing profit booking. 💼This is a healthy trend and is likely to sustain for some more time. Prices cannot soar continuously. Reversion to mean is a normal trend. 💼The trend of FII selling and DII buying continues. But the fall in the dollar index to 101.39 has the potential to arrest the trend of FII outflows. 💼But big FII investment will happen only if Indian valuations correct, which appears unlikely in the present context of sustained domestic inflows. 💼Despite high valuations the undertone of the market continues to be bullish. . . . #StockMarket #inflation #EconomicOutlook #MarketUpdate #InvestmentOpportunity #EmergingMarkets #StockMarket #inflation #EconomicOutlook #MarketUpdate #InvestmentOpportunity #EmergingMarkets

💼With eight straight days of gains the US market is sending positive signals which can keep this global rally going. 💼The Fed chief Powell’s comments at Jackson Hole this Friday will be keenly watched by the markets. The likely scenario is a 25 bp rate cut by the Fed in September followed by two more rate cuts this year. 💼This can continue to support the equity markets globally and in India too. 💼The decline in Brent crude below $ 78 is a macro positive for India. At the micro level this can lead to mild rally in stocks of companies that use crude as input such as paints, adhesives and tyres. 💼FIIs may continue to sell in India since other emerging market valuations are relatively attractive and , therefore, the largecap financials where FIIs hold large stakes may continue to remain under pressure. 💼Paradoxically, financials are the most attractive segment from the valuation perspective even though the struggle for deposits are keeping the sentiments negative for this segment. 💼When the scenario changes there is a possibility of a sharp up move in financials. . . . #StockMarket #inflation #EconomicOutlook #MarketUpdate #InvestmentOpportunity #EmergingMarkets #StockMarket #inflation #EconomicOutlook #MarketUpdate #InvestmentOpportunity #EmergingMarkets

💼Globally stock markets have turned around smartly from the August 5th sell off triggered by US recession fears and the unwinding of the yen carry trade. 💼Latest data on US inflation and unemployment relief do not indicate an economy tipping into recession. 💼On the other hand, the 2.9% annual inflation number and slightly softening labour markets set the stage for a Fed rate cut in September, which the market is pencilling in now. 💼The sharp dip in CBOE VIX to around 15% indicates that the fears were overdone, and stability is the near-term trend. 💼In India we have the paradox of exuberant retail investors and cautious institutional investors. 💼The former is not much concerned about the elevated valuations of the market while the latter are increasing their cash component on valuation concerns. 💼Investors should give priority to valuations in their fresh investment. The broader market doesn’t have valuation comfort. #StockMarket #inflation #EconomicOutlook #MarketUpdate #InvestmentOpportunity #EmergingMarkets #StockMarket #inflation #EconomicOutlook #MarketUpdate #InvestmentOpportunity #EmergingMarkets

💼The PPI inflation numbers from the US indicate softening of inflation, and a confirmation of this declining trend is likely from the CPI numbers coming today. 💼The US market moved up yesterday on anticipation of this and a rate cut by the Fed in September. 💼If the rate cut is by 50bp, the US market will remain resilient lending support to global markets. This is the likely scenario. 💼On the other hand, if the Fed disappoints with no rate cut, the market will sell off and this will have repercussions globally. 💼In India the pattern of FII selling on valuation concerns and DII buying supported by money flows continues. 💼Some segments like defence related stocks which have run far ahead of fundamentals are witnessing corrections. 💼Financials continue to be under pressure on concerns arising from rising costs of deposits. For long- term investors quality banking stocks offer value. . . . #StockMarket #inflation #EconomicOutlook #MarketUpdate #InvestmentOpportunity #EmergingMarkets #StockMarket #inflation #EconomicOutlook #MarketUpdate #InvestmentOpportunity #EmergingMarkets

💼Market’s dismissal of the Hindenburg report as inconsequential is significant. 💼This further reinforces investors’ confidence in the success of the buy on dips strategy which has been one of the main driving forces of this bull run. 💼The market which has been climbing all walls of worries has climbed this Hindenburg wall too, instilling confidence in retail investors and DIIs flush with money. 💼However, it is important to understand that Q1 results indicate slight moderation in earnings growth and, therefore, investors need expect only modest returns in FY25. 💼Elevated valuations in the broader market continue to be a concern. 💼The dip in CPI inflation in July to 3.54 % is positive. But the MPC is unlikely to be moved for a rate cut soon since the dip is mainly due to the base effect. . . . #StockMarket #inflation #EconomicOutlook #MarketUpdate #InvestmentOpportunity #EmergingMarkets #StockMarket #inflation #EconomicOutlook #MarketUpdate #InvestmentOpportunity #EmergingMarkets