Geojit Financial Services Ltd

💼 The ability of bull markets to climb all walls of worries is being demonstrated by the ongoing bull market, which has shrugged off all headwinds, be it geopolitical or economic. 💼 The Middle East tensions had only temporary impact on the market. 💼 The scaling down of rate cuts by the Fed from six at the beginning of this year to three or perhaps two or even lower also has not impacted the bull run. 💼 And, the indication from the sharp decline in the volatility index VIX by around 20% to 10.2 is that the downside risk to the market is low. 💼 So it makes sense to remain invested in this market and to continue investing by buying the dips. 💼 Since the US 10-year bond yield continues to remain above 4.6% FIIs will remain sellers putting pressure on large Caps like leading private sector banks. For long-term investors, this segment is a buying opportunity. . . . . #StockMarket #inflation #EconomicOutlook #InvestmentOpportunity #EmergingMarkets #MarketUpdate #StockMarket #inflation #EconomicOutlook #InvestmentOpportunity #EmergingMarkets #MarketUpdate

💼 The undercurrent of bullishness of this market has been reinforced by the market action during the last two trading days which saw Nifty spiking by 486 points from Friday’s lows. 💼 External factors like the high bond yields in US ( the 10-year continues above 4.6%) and geopolitical concerns in the Middle East are not impacting the underlying bullish trend. 💼 FPI selling triggered by high US bond yields is neutralised by aggressive DII buying, putting the FPIs on the back foot. 💼 In the mother market US also the market is strong despite continuous downgrades in expectations of rate cuts. 💼 The US economy has surprised by evolving from fears of hard landing to hopes of soft landing to the new reality of no landing. 💼 The market expectations of six rate cuts at the beginning of this year has sharply declined to two rate cuts now, and the market has taken this in its stride. 💼 The only concern in the market now is the high valuations particularly in the broader market. Investors may stick to the safety of fairly valued largecaps. . . . #StockMarket #inflation #EconomicOutlook #InvestmentOpportunity #EmergingMarkets #MarketUpdate #StockMarket #inflation #EconomicOutlook #InvestmentOpportunity #EmergingMarkets #MarketUpdate

💼 The biggest positive for the market in the near-term is that the feared escalation in the Israel-Iran tension is unlikely to happen. 💼 Israel didn’t officially confirm its strike in Iran and Iran downplayed the Israeli strike by ignoring it. The takeaway is that both sides don’t want an escalation of tensions. 💼 Decline in Brent crude from $90 to $87 is a confirmation of this expected deescalation. 💼However the market is likely to be weighed by the high US bond yields ( the 10-year yield has spiked to 4.65%) which can trigger further selling by FIIs. 💼 Since largecaps constitute the lion’s share of the AUM of FIIs, the pressure will be on largecaps despite their relatively fair valuations. 💼 FII selling will provide opportunities to investors to slowly accumulate high quality largecaps like HDFC Bank which has reported good Q4 results with improving margins. 💼 The Q4 results of autos, capital goods and cement companies will be good and the market can be expected to respond positively to the numbers. . . . #StockMarket #inflation #EconomicOutlook #InvestmentOpportunity #EmergingMarkets #MarketUpdate #StockMarket #inflation #EconomicOutlook #InvestmentOpportunity #EmergingMarkets #MarketUpdate

💼 Reports of the feared escalation of the Iran-Israel tensions have spooked the markets. 💼 Distinct weakness in Asian markets and sharp cuts in US futures reflect heightened nervousness in equity markets. 💼 There are headwinds from the bond markets, too. The sharp spike in US bond yields have triggered big FII selling which touched Rs 4260 crores yesterday. 💼 More FII selling can be expected in the near-term putting pressure on largecaps. Investors may wait for clarity to emerge on the geopolitical front. Uncertainty is very high. . . . #StockMarket #inflation #EconomicOutlook #InvestmentOpportunity #EmergingMarkets #MarketUpdate #StockMarket #inflation #EconomicOutlook #InvestmentOpportunity #EmergingMarkets #MarketUpdate

💼 The Iran-Israel tension in West Asia continues to weigh on stock markets globally. 💼 Until this uncertainty is out of the way, markets are unlikely to take a strong directional up move. 💼 The hope is that the feared Israeli response will not lead to an escalated regional conflict. This is reflected in the 3% drop in crude price during the last two trading sessions. 💼 Meanwhile the market is coming to terms with ‘higher-for-longer interest rate’ in the US since inflation continues to be sticky at lower levels. 💼 It seems that the market is reconciled to 2 rate cuts this year, that too backloaded. 💼 Since the US 10-year bond yield is hovering around 4.57%, more FII selling is likely, putting pressure on large-caps. 💼 This will provide opportunities to investors to slowly accumulate high quality largecaps where the margin of safety is high. 💼 In the near-term, however, heightened activity is likely in mid and smallcaps, particularly in stocks where floating stocks are low. This is a risky area. . . . #StockMarket #inflation #EconomicOutlook #InvestmentOpportunity #EmergingMarkets #MarketUpdate #StockMarket #inflation #EconomicOutlook #InvestmentOpportunity #EmergingMarkets #MarketUpdate

💼 Two issues- one economic and the other geopolitical- will continue to weigh on markets in the near-term. 💼 The economic factor is the rising US bond yields ( 10-year yield is above 4.6% ) which reduces the prospects of rate cuts by the Fed this year. 💼 High bond yields are negative for risky assets like equity and will accelerate FII selling in emerging markets like India. 💼 The market is more concerned about the geopolitical issue. 💼 Israel’s military chief’s statement that “there will be a response to Iran’s attack on Israel” has increased the probability of escalation of tensions in the Middle East. 💼 We don’t know the timing and the nature of the Israeli response, which can be totally unexpected. This is likely to keep the markets weak in the near-term. 💼 Investors may wait and watch the developments. Meanwhile, long-term investors can slowly accumulate high quality large-caps on corrections. 💼 Further corrections will make valuations of large-caps fair. Largecaps in banking, IT, autos, capital goods, oil &gas and cement are ideal for long-term investment. 💼 Since metal prices are firming up, metal stocks will remain resilient. . . . #StockMarket #inflation #EconomicOutlook #InvestmentOpportunity #EmergingMarkets #MarketUpdate #StockMarket #inflation #EconomicOutlook #InvestmentOpportunity #EmergingMarkets #MarketUpdate

💼 There are many headwinds that will weigh on markets today: the renewed conflict in the Middle East, proposed changes in the India-Mauritius tax treaty and the hotter-than-expected US inflation are negatives. 💼 But partly these negatives are in the price since a retaliation from Iran was expected and the higher US inflation was discounted by the market on Friday. 💼 Signals from the crude market indicate that the Iran-Israel conflict is unlikely to escalate. 💼 President Biden has clearly indicated that he doesn’t support Israeli retaliation. So, the situation may calm down. 💼 However, investors have to be guarded since the element of uncertainty is high during a tense situation like this. 💼 IT stocks will be resilient on the back of better-than-expected numbers from TCS and promising outlook for FY 25. 💼 Banking stocks will exhibit strength since the results will be good and valuations are fair. . . . #StockMarket #inflation #EconomicOutlook #InvestmentOpportunity #EmergingMarkets #MarketUpdate #StockMarket #inflation #EconomicOutlook #InvestmentOpportunity #EmergingMarkets #MarketUpdate

💼 The hotter-than-expected US inflation has spiked the US bond yields. 💼 This is negative for FPI inflows but is unlikely to impact the Indian market which is resilient, and the rally is driven mainly by domestic liquidity. 💼 Dips are likely to get bought imparting strength to the market. Therefore, investors may use the dips to buy high quality largecaps where the margin of safety is high. 💼 From the global equity market perspective sticky US inflation is a negative since it has reduced hopes of three rate cuts by the US. 💼 But it is important to note that there is a real positive factor in the sticky inflation, and that is the exceptionally strong US economy which is showing no signs of a slowdown, leave alone recession. 💼 This resilience of the US economy will support earnings growth and, therefore, the US stock market. This favourable backdrop will be positive for other markets including India. . . . #StockMarket #inflation #EconomicOutlook #InvestmentOpportunity #EmergingMarkets #MarketUpdate #StockMarket #inflation #EconomicOutlook #InvestmentOpportunity #EmergingMarkets #MarketUpdate

💼 Robust economic growth, decent corporate earnings, macroeconomic stability, expectations of political stability after elections, sustained capital flows, and retail investor enthusiasm will keep the market resilient despite rich valuations. 💼 A significant recent healthy trend in the market is the outperformance of the fundamentally strong largecaps over the mid and smallcaps. 💼This trend is making the market healthier and, therefore, has the potential to continue. Largecap banking stocks are likely to be the leaders if the rally sustains. 💼The US CPI data to be published today is significant since that will determine the quantum of rate cuts by the Fed this year. 💼 The fact that US inflation has come down by two thirds is significant and positive from the market perspective, but the trajectory of inflation, going forward, will largely influence the direction of stock markets, globally. . . . #StockMarket #inflation #EconomicOutlook #InvestmentOpportunity #EmergingMarkets #MarketUpdate #StockMarket #inflation #EconomicOutlook #InvestmentOpportunity #EmergingMarkets #MarketUpdate