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💼 Dow Jones closing in record territory above 40000 will continue to provide the global support for equity markets. 💼 However, in India, the election related jitters might continue to cause high volatility. 💼 A significant trend now is the FIIs turning buyers yesterday, and this takes away the pressure on the markets. 💼 The unknown in the market now, and there are many views regarding this, is the impact of the low turnout in the first three phases of polling on the election results. 💼 If this impacts the BJP/NDA adversely and they fall short of the market expectations, there can be high selling dragging the market down. 💼 Conversely, if the BJP wins above 300 seats, there can be a sharp rally in the market. 💼 Largecaps in financials, autos, capital goods, telecom and real estate are likely to lead the rally. This appears to be the most likely scenario. #StockMarket #inflation #EconomicOutlook #InvestmentOpportunity #EmergingMarkets #MarketUpdate #StockMarket #inflation #EconomicOutlook #InvestmentOpportunity #EmergingMarkets #MarketUpdate

💼 There are some positive global and domestic cues which augur well for the market. 💼 The decline in US inflation in April to 3.4% YoY and retail sales cooling off indicate soft landing of the US economy, paving the way for rate cuts by the Fed. 💼 This favourable global construct can impart resilience to the mother market thereby providing stability to other markets. 💼 Domestically, the improvement in the voter turnout in the 4th phase of polling is a positive from the market perspective since it removes some jitters associated with election results. 💼 Coming to the market trends, the net institutional buying turning positive, the sharp recovery of nearly 350 points from the lows in Nifty and the large short position in the market have the potential to aid recovery in the market. 💼 Going forward, news from the political front are likely to turn more positive. 💼 FII-heavy stocks which bore the brunt of selling are likely to witness further recovery. . . . #StockMarket #inflation #EconomicOutlook #InvestmentOpportunity #EmergingMarkets #MarketUpdate #StockMarket #inflation #EconomicOutlook #InvestmentOpportunity #EmergingMarkets #MarketUpdate

💼 The underperformance of the Indian market during the last one month is striking. 💼 While the S&P 500 is up by 5.08 % and Euro Stoxx 50 is up by 3.74%, Nifty is almost flat with only 0.24% gain. 💼 More important is the huge outperformance of Chinese stocks with stunning gain of 17.38 % in Hang Seng. 💼 It is this outperformance of China that is causing the sustained selling by FIIs in India. 💼 India’s underperformance is like to change soon with clarity on election results. 💼 DIIs, HNIs and retail can turn aggressive buyers lifting the market sharply. FIIs can’t afford to miss this potential rally. 💼 The only risk is political instability after elections which appears a very low probability event now. 💼 Meanwhile the global market construct continues to be supportive with the US indices setting new records. 💼 The decline in US CPI inflation in April to 3.4% sets the stage for a rate cut by the Fed. . . . #StockMarket #inflation #EconomicOutlook #InvestmentOpportunity #EmergingMarkets #MarketUpdate #StockMarket #inflation #EconomicOutlook #InvestmentOpportunity #EmergingMarkets #MarketUpdate

💼 Sustained FII selling in May so far has taken the total FII sell figure to Rs 33540 crores and the sustained DII buying has taken the total DII buy figure to Rs 26500 crores. 💼 Because of this balancing of the FII selling with DII buying, the market has not moved much, though it has been highly volatile. Nifty is down only 0.25 % in the last one month. 💼 The overarching factor driving the FII selling is the outperformance of Chinese stocks which are witnessing a rebound from beaten down valuations. 💼 The Hang Seng index is up by 14.90% in the last one month. FIIs invest in Chinese H stocks listed in Hang Seng. 💼 So long as this outperformance of Chinese stocks sustain, FIIs may continue to sell in India. 💼 A clear change in the market direction will happen when clarity emerges on the election results in India. 💼 A high probability is DIIs, HNIs and retail investors buying aggressively if the election results are favourable from the market perspective. Such aggressive buying can put the FIIs on the back foot. 💼 FIIs-heavy largecaps will continue to be weak and this will be an opportunity for investors to accumulate them. . . . #StockMarket #inflation #EconomicOutlook #InvestmentOpportunity #EmergingMarkets #MarketUpdate #StockMarket #inflation #EconomicOutlook #InvestmentOpportunity #EmergingMarkets #MarketUpdate

💼 There is confusion regarding the reasons for the aggressive FPI selling in May. 💼 There are media reports attributing the FPI selling to possible setbacks to the NDA/BJP in the elections. 💼 It is important to understand that the FPI selling is due to a change in FPI stance from ‘sell China, buy India’ earlier to ‘sell India, buy China’ now. 💼 This change in stance has been caused by the recent outperformance of China ( Shanghai Composite up by 3.96% and Hang Seng up by 10.93% last one month) and underperformance of India ( Nifty down by 2.06% last one month). 💼 This is likely to be a near-term trend triggered by the cheap valuations of Chinese stocks and the relative high valuations of India. 💼 It is important to understand that India’s long-term prospects are much better than China’s. 💼 Results of the autos sector are good. The sector is in a cyclical uptrend. . . . #StockMarket #inflation #EconomicOutlook #InvestmentOpportunity #EmergingMarkets #MarketUpdate #StockMarket #inflation #EconomicOutlook #InvestmentOpportunity #EmergingMarkets #MarketUpdate

💼 The divergence in institutional activity is becoming stark this month. 💼 FIIs have turned sustained sellers and DIIs have turned sustained buyers in all trading days of this month, so far, with cumulative FII selling of Rs 22858 crores and cumulative DII buying of Rs 16700 crores. 💼 From the data showing sharper declines in the broader market, it appears that HNIs and retail investors have booked some profits and are in a wait and watch mode, perhaps responding to the noice relating to uncertainty regarding the election results. 💼 An important point to understand is that FIIs are selling not because of concerns relating to elections but because India is underperforming ( Nifty down by 3.5% in last one month) while China and Hong Kong are outperforming ( Shanghai Composite and Hang Seng up by 4.19% and 8.61% respectively in last one month). 💼 So long as this ‘Sell India, Buy China’ trade sustains FII selling will weigh on the markets. The situation can change dramatically when clarity emerges on the election outcome. 💼 If the election results turn out to be favourable from the market perspective, aggressive buying by DIIs, retail and HNIs can push the market sharply up. 💼 So, investors can wait for clarity to emerge on the political front. Meanwhile long-term investors can slowly accumulate high quality largecaps, particularly those in banking and automobiles that have delivered good Q4 results. . . . #StockMarket #inflation #EconomicOutlook #InvestmentOpportunity #EmergingMarkets #MarketUpdate #StockMarket #inflation #EconomicOutlook #InvestmentOpportunity #EmergingMarkets #MarketUpdate

💼 A major trend in the market now is the aggressive selling by FIIs, which has touched to Rs 15863 crores so far this month. 💼 Though DIIs are buying they are not as aggressive as they were due to some concerns surrounding elections results. 💼 It is important to understand that there is a new factor triggering FII selling, apart from the high US bond yields. 💼 This is the outperformance of the Chinese and Hong Kong markets. 💼 During the last one month while Nifty is down 1.5% the Shanghai Composite is up by 2.62% and Hang Seng is up by a whopping 8.8%. Chinese and Hong Kong markets are cheap with PEs around 10 while India is expensive with double the PE of these markets. 💼 So long as this outperformance of Chinese and Hong Kong market continues, FIIs are likely to sell. The weakness in frontline financials is primarily due to FII selling. 💼 For long-term investors, this is an opportunity to buy high quality large caps driven down by FII selling. Previous episodes of FII selling turned out to be good buying opportunities. . . . #StockMarket #inflation #EconomicOutlook #InvestmentOpportunity #EmergingMarkets #MarketUpdate #StockMarket #inflation #EconomicOutlook #InvestmentOpportunity #EmergingMarkets #MarketUpdate

💼 The pressure on the market now is due to the uncertainty regarding the election outcome. 💼 There are lots of speculation in the media regarding this and this has added to the uncertainty in the market. 💼 The India VIX spiking 72% from the April lows indicates that high volatility will persist for some more time. 💼 It is important to understand that VIX is based on Nifty index options prices. The spike in VIX is due to rising volume of options trades. 💼 Many investors are buying put options to protect their portfolio in case of unexpected election outcome. 💼 For long-term investors the ongoing volatility and uncertainty present buying opportunities. Despite the uncertainty the base case scenario is the return of NDA to power. 💼 Once clarity emerges on this, the market will bounce back sharply led by high quality largecaps which are weak now due to big selling by FIIs. 💼 The FII selling in May till now has touched Rs 9194 crores dwarfing DII buying of Rs 5129 crores. This divergence is unlikely to last long. . . . #StockMarket #inflation #EconomicOutlook #InvestmentOpportunity #EmergingMarkets #MarketUpdate #StockMarket #inflation #EconomicOutlook #InvestmentOpportunity #EmergingMarkets #MarketUpdate

💼 A significant near-term trend in the market is the underperformance of the Indian market despite positive global cues. 💼 The Dow has been trending up for four consecutive trading sessions, but the Nifty has turned highly volatile and apprehensive. What might be the reasons for this? 💼 One is the selling by FIIs which touched Rs 5525 crores in the three trading sessions in May so far. 💼 But there is nothing unusual about this since FIIs sell when the US bond yields are attractive. 💼 Perhaps, the more significant factor might be the apprehensions emanating from the unexpectedly low turn out in the elections, so far. 💼 One view is that the definite and smooth victory of the ruling dispensation is a bit uncertain now. 💼 The market which has already discounted a BJP/NDA victory is a bit unsure now. Perhaps, this can be reason for the apprehension in the market and the bulls shedding their aggressive stance. 💼 In the last one month the VIX has spiked by 46% and is hovering around 16.6 now. This means volatility and uncertainty will continue for some time. 💼 Meanwhile investors can use the market weakness to buy high quality largecaps on dips. 💼 Leading private sector banking names, automobile majors and the leading telecom companies are fundamentally strong and fairly valued. . . . #StockMarket #inflation #EconomicOutlook #InvestmentOpportunity #EmergingMarkets #MarketUpdate #StockMarket #inflation #EconomicOutlook #InvestmentOpportunity #EmergingMarkets #MarketUpdate