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Domestic MF outflow & US tech rout sending out ominous signals

The confidence of the cops get crushed during the week gone by after US tech stocks came gate-crashing down, clanging the entire financial market. Nasdaq’s crash does not look like a ordinary amendment; it looks like a bigger downward coiling is narrating after valuations skyrocketed. With the US ballots simply 52 days apart, it seems unlikely that the US market will perform fresh high again and there is every likelihood that selling pres may continue even in the wider markets.Crude oil, extremely, has given up most of its advantages and prices have slipped below $40 per barrel on promises of lower requirement going ahead, which suggests the world-wide recuperation might take longer than what was anticipated earlier. In contrast, gold’s surprising move is not hinting at any major crash in financial markets, as the prices of the yellow-bellied metal consolidated and remained continuous even when Nasdaq plummeted.One of the important ways to analyse the psyche of an investor is by measuring cash flow into mutual funds. Contrary to previous attitude, retail investors aggressively pressed the redemption button in July and August, when the outflow hit a 10 -year high of Rs 8,000 crore in two months. These maniacal withdrawals by mutual fund investors is sending out two signals: Either there is a liquidity crunch in household savings rates or the high-pitched valuation of Mr Market is becoming investors cautious.Both these do not augur well for Indian capital market. There is a long lineup of IPOs and FPOs and the market has already rallied roughly 50 per cent of cases from their March lows. If mutual fund recoveries are made as any valid sign, plans to raise money by corporates and governments may stumble a impediment and the bull market rally might get punctured. In summing-up, they hint world markets are at elevated levels and the risk-reward ratio is absolutely not in favour of investors any more. There is a lot to lose on the downside, and restriction gain on the upside.Event of the weekThe Supreme Court is yet to pass an guild on the issue of charging compounding interest and credit rating downgrading for the moratorium date. The apex law has passed an interim attitude, is of the view that no chronicle should be said as NPA as of August 31, 2020 till further notice. This direction, though, sacrifices only temporary relief to the financial services sector, but the aching in the entire economy surely perseveres and is only getting delayed. Therefore, bank stocks are bound to remain under pressure until here i am further lucidity on the issue.Technical outlookAfter assembling a Bearish Engulfing Pattern previous week, Nifty5 0 transactions in a restrict wander this past week. However, Bank Nifty closed on a negative note after constituting a bearish cloud cover last week. The overall affection remained subdued and a bullish move in selected index movers such as RIL contributed the Nifty some bit higher. The standard index is still trading in the overbought zone on a weekly time frame chart and we maintain a bearish prognosi plan ahead, as the indicator is likely to retest the lower end of the channel drawn from March lows on a weekly chart. Immediate support and opposition are now placed at 11,180 and 11,590 status, respectively. 7807214 2Expectation for the weekAs we get closer to the US ballots, the theatrics are set to grow louder both politically and economically. Marketplaces across the globe would remain wary and may react and adapt to any important word overflow from the presidential campaign. Back home, given the onset of a slack season berth quarterly earnings, the market could be driven principally by the heavyweight constituents. RIL is a surpass contender to keep Nifty afloat, passed its second wave of fund promote spree for the retail arm. And this might probably keep the overall busines affection positive. Subdued crude prices, economies opening up, amalgamation of golden may cumulatively indicate that marketplaces are relatively better placed than it was a few months ago. Nonetheless, investors should not read much into heavyweights, as world cues are neutral to negative now and should be maintained cautious. Investors are advised to remain on the sidelines and look to increase liquidity in their portfolios.Nifty5 0 closed the week at 11,464, up 1.2 per cent of cases.

Read more: economictimes.indiatimes.com

40,000 target for Sensex: Morgan Stanley

What has done in order to originate India more accessible to FDI and portfolio financing are important evolutions, but the stability of the financial system is more crucial, says Jonathan Garner, Chief Asia& Emerging Market Strategist& Chairman of Asset Allocation.What is the kind of earning revision directions that you have been looking at and where does India stand right now? How are you assessing the current situation based on the various kinds of earnings and commentary that we have been seeing? If you look across our coverage, what is very palpable by marketplace is the way that the earnings estimates in north east Asia, particularly China, Korea and Taiwan, have turned out more rapidly and to a greater extent than those elsewhere in our coverage macrocosm. In India’s case there is an improvement and in terms of earnings revision wide, it is more in the middle of the parcel. Latin America in particular is lacking and that is reflected in the performance of Latin american countries. Given that you are seeing some improvement and the fact that we continue to see fairly strong liquidity post central bank action globally, do you expect Indian marketplaces to tend higher from here? Is there enough interest possibility or are valuations starting to look overpriced? Again, it is in the middle of the carry and we have given an equal value recommendation. We could see Sensex at around 40,000 again if all goes well, but we continue to have greater upside particularly for the China equity indices and must notably the Asia Index. One of the things we are monitoring is liquidity and retail investor feeling. When you look at account openings, boundary, futures trading and wide-ranging coin raise — all that is stronger in China and Korea than in India and specific areas of Latin America and East and Middle East Africa. In expressions of reforms or structural moves from the government, is there anything that you would have liked to see from India? There has been so much talk of India taking advantage of the current hostilities between US and China, but Chinese business continue to be front and centre when it comes to this part of the world. What more could India do to create more resistance now? One of the key things that we have been consistently emphasising in recent years is credit start and in getting public sector organizations banks in a better chassis. There has been some action but we also had a shadow banking credit crunch in India. It is really important for the overall economy and earnings are progressing, but you have a more stable and prolonged informant of approval for businesses and households and that is probably the single main thing. It is not to underestimate what has been done in terms of preparing India more accessible to foreign direct investment for example and portfolio speculation. These are important developments but I think it is the stability of the financial system that is crucial. The markets globally might envision a sharp tumble, perhaps from October. What are the risks that you insure? Yes, we have got a US presidential election cycle and the markets in the US can be weak in the two or three months running up to that and that will obviously be in November. We have gone through apparently a very sharp recovery in markets and so it is really important to monitor whether earnings do come through. That is good news in that sense but US and European earnings cycles/second has begun relatively well and we patently have US-China antagonisms and that needs to be monitored very closely, but we have come a long way in a short period of time. Business for the overall EM index are at about 4-5% above our index target. We are certainly not in an environment where we would be recommending a strong buy right now. What could run a risk for India because sporadically some of the states are entering into miniature lockdowns. Do you be understood that as a risk and could that really pose a threat to the 40,000 target that you set out for the Sensex? Oh! Yes it certainly could and we are monitoring the lockdowns and stops to economic undertaking very carefully. The national lockdown has stopped not only in India but in most geographies. We are seeing a particularly diverging motif in areas of brand-new Covid cases and the pressure on the economy and on consumer interests. Again broadly speaking, Latin America, East or Middle East, Africa and South Asia are performing less well than Northeast Asia and that is a unusually enunciated divergence in relation to Covid. With reference to impending US referendums, one pictures the dollar weakness playing out especially in the dollar attached assets. In action of prized commodities, gold has hit a nine-year high, silver is at a seven-year high previously. Do you picture the dollar cripple further closer to the US election? We certainly have been arguing for a weaker dollar, in particular against the Euro. We had this Eurozone recovery fund which is again very important structural exploitation and the dollar is obviously affected by Fed policy. More than the US election cycle and if you look at long maturity real interest rates in the US, what you see is that the 10 -year maturity real interest rates are at around minus 90 bps and those real interest rates are going further into a negative territory. That tells us that the markets are expecting the Fed to be even more stimulative and actually the phase of certain growth environment in the US and that is likely to weaken the U s dollars. It being told that every round and every crisis causes a brand-new opening but what we have seen in global markets and neighbourhood business that the previous winners have only become the outperformers like the US Tech corporations, Indian consumer business, selective private banks. Do you think the trend of this mega ceiling absorption is a global phenomenon which will last for the next got a couple of one-quarters? Jonathan Garner: Certainly. The force parts are exceptionally strong globally. It is about to change that many of the business prototypes that were already doing well particularly in the e-commerce, internet cavity. For illustration, selective buyer firms are doing even better in this work from residence environment and so it is important to monitor valuations. If you look at growth broths, relative to value inventories they are at all-time high-pitched valuations. So, that is not back to value inventories. Industrials, exertion the documentation and overall monetaries would be linked to how strongly economic recovery may be as we go into 2021. Rising real interest rates often facilitate value inventories to better and you might get some pirouette out of growth capitals. Given that right now the world narrative is against China, do you think world investors could relook at reducing their weightage towards Chinese equities in general? For world-wide investors who follow MSCI benchmarking, China has a very large position but frankly the narrative for Chinese manufacturing corporations, Chinese internet companies and Chinese banks is not all that enormous? Global investors has already been been abbreviating. They are underweight on China in recent months and in fact they are less below standard than they have been at any stage since 2009. That is related to the better fiscal recital and better earnings revisions patterns that we are seeing. In that smell, investors are not expressing a significant concern on US-China strains. Nonetheless, we recommend showing to Asia’s where foreign investors are much less of an important feature of trading volumes rather than the US registered ADRs which would be more at risk if there is further escalation of US-China strains.

Read more: economictimes.indiatimes.com

Tweet Buster: St in ‘panicdemic’ & why RBI can’t soften virus hit

NEW DELHI: The week been going on renewed up recollections of 2008 financial crisis as world-wide stock exchange sunk following the spread of coronavirus to more than 50 countries. As the nations of the world dealt with the fiscal implications of the crisis, investors were busy fleeing towards safe haven resources such as bails and amber. BSE benchmark Sensex nosedived 1,448 tops alone on Friday to log its second-worst pointwise decline in history. No sphere was left unscathed.ETMarkets.com did a roundup of what the top market thoughts made use of this move and what they predict going ahead. On a lighter record, chairman of Mahindra Group Anand Mahindra proposed a new term for the coronavirus panic-induced market crash:’ Panicdemic’.Time to coin a new phrase. When markets panic over a pandemic is it a’ panicdemic? ’ — anand mahindra (@ anandmahindra) 15828699200 00

Independent market expert Sandip Sabharwal seems to find opportunity amid this crisis. The expert would like to buy this grocery autumn, yet he is unsure it has reached the bottom yet.As a BULL I have a strong suggest to Buy now after such a severe sell off Controlling those urges as the worst might … https :// t.co/ hxDGVnXyBk — sandip sabharwal (@ sandipsabharwal) 15828619690 00

Sabharwal in another tweet said India unlike other meters is better placed to face the crash and is no longer part of the “fragile” club. He witnesses India’s forex reserve, strong FDI inflows and low-spirited inflationary pressures as a cushion against marketplace selloff.The good component for #India this time Vs previous busines selloffs is that – Our external posture is strong with reco … https :// t.co/ pikfe8Alzz — sandip sabharwal (@ sandipsabharwal) 15826206200 00

In another tweet, he said the fall could play out over the next 2-3 weeks, but could be well over before the summer comes and the possibility of coronavirus spreading abates. People try to find a fanny after time ONE daylight of a Nasty # StockMarket selloff Not so fast The time will come soon … https :// t.co/ g9p6w42ayY– sandip sabharwal (@ sandipsabharwal) 15825493640 00

#Coronavirus eruption is a Non Linear event. As such presage its consequence in terms of duration and dimension on the … https :// t.co/ Tms3 8d ZdEt — sandip sabharwal (@ sandipsabharwal) 15828095180 00

Value investor Jiten Parmar admonished investors to not invest in fellowships that are likely to benefit from the spread of coronavirus in the short term, instead he advised them to focus on areas with long term tailwinds.Do not perform asset decisions based on short term benefits to sure-fire companies/ areas due to CoVid 19. That ma …

Read more: economictimes.indiatimes.com

See floor for market between 10,500 and 10,750: Jhunjhunwala

Low interest rate scenario is here to stay. Interest charges worldwide are not going to reverse readily because there is no inflation on the horizon, says Rakesh Jhunjhunwala, Owner, Rare Enterprises. Excerpts from an interview with ETNOW.What do you perform of the FM announcements on Friday? Do you think there is enough in the bulletin to fix the affection and their own economies? There is no one thing which can resurrect sentiment. Economic activity is a series of things. Well surely it is an expression that the government is concerned and it is going to take all those steps which are necessary to revive the economy. That itself is a very good feeling and the steps which they have taken are good and will help revive the economy. Do you think there is just too much of despair on the Street? When I say Street, I am not just referring to market, I make reference to financiers, shoppers. Everybody is talking about slowdown. But do you think the reality is different from what everybody is narrating? It is very fashionable to talk about the slowdown and how severe it is. But experience tells me that it is not highly profitable. I have never seen that pessimism in the market. When we spoke last-place, you said we must remember the lane India did business in the last couple of decades versus how India will do business in the coming decades would change. The change is coming at a cost. When do you think the benefits of the transition will start showing in economy and also at various objects? It is not that they are not wondering. It is not that the benefits of GST are not manifesting but a series of measures have to be taken and combined together, they will really give a boost. Do you think the government has done the right thing by not comprising on the monetary because the easy thing would have been them to bust the fiscal and start spend? If I were to decide, I would not mind endangering some constituent on the monetary but with the poorest of the poor tax collections and the ambitious targets, we will have to have some kind of correction in the fiscal naturally itself because I do not foresee tax collections are going to match what the government has estimated. Therefore there is not much space for fiscal mildnes but nevertheless, 25 -3 0 bps is not going to mean much and with inflation under control and the world under busines fighting I would advocate some moderation in the operating deficit. When do you picture the sentimentality turning around? See sentiment turning around is not an event, it is a process. It will take time and therefore I belief the Street today is negative in spite of what the government has announced. Maybe it is because of the fall in global markets. If people do not get too excited, then things will stabilise and I feel it is too much for us to expect that the market will bounce back in a big way immediately. Markets are going to go circular. They are going to take time. But the bottoming out process will start. But don’t you think that the measures will put a storey at least to this falling market? Only last week we have had a rough patch and on Friday, we rebounded from those lows of ten, 750 thereabouts. Do you sense that a storey could be near at least? I personally feel anything between 10,500, 10,750 is a floor for the market. And you do not anticipate the previous lows would be tested again? Well they will be tested but I do not think it will be very effectively broken. Last-place duration when we spoke you also mentioned to watch out for midcap assets who the hell is due for a sharpish amendment. Do you think the pricewise correction is over in mid and smallcap inventories? I do not know whether the chastening is over or not, but I do examine a lot of opportunity in midcap assets and I personally will be universally a purchaser of midcap stocks at this rank will gain handsomely in time to come.Do you think the gloom in the stock price is overdone and fundamentals are not that bad? Yes, I envisage the gloom is overdone. Given that we are in a very low interest rate regime locally and around the world, what kind of scenario in coming years could we be staring at? The low-pitched interest rate scenario is here to stay. Interest rates worldwide are not going to reverse easily because there is no inflation on the horizon. How disorderly could the trade conflict be for the world? It is going to be unruly for the world but I do not think it is disorderly for India. You are making a case that India will gain because of trade war because India is not a large player? India will not lose because a lot of the manufacturing will change and also exports are not such a very important part of the Indian economy. Unless and until Americans start targeting works, I is not envision India will be positively changed. The biggest silver lining for Indian business has been the SIP spurts. Do you think the SIP flows and domestic financing will pick up further? Ultimately savings have to go somewhere and I think they will find their home in financial markets and within finance markets, a large part in equity. Now with the PSU bank recapitalisation coming in, do you think giving can come back to the system? Lending will have to come back, what will the banks do with the money? But they were resisting? They were defying but I do not think they will resist. I symbolize, ultimately they will have to lend. You have always been very optimistic on the banking sector. In a recent interview you also said the peak of the NPA cycle has passed. Is it time to look away from corporate banks and look at PSU banks? That you shape your own selects. I would not like to comment on it. In terms of opportunity, you said there is definitely an opportunity in the broader sells. I want to get a sense from you.So you study, I did not wish to see criticisms about any specific sector or stocks.

Read more: economictimes.indiatimes.com