Get a Quote

Hello there!! You are just a few steps away from taking control of your future.
+91 - 6290796534
+91 - 7980325180
Get a Quote

Hello there!! You are just a few steps away from taking control of your future.

Market Volatility – Autumn 2018

Dear investors,

The next couple of weeks will see market trading in a negative zone with higher volatility. This may lead to your portfolio getting into marginal negative or loss zone. We could have sold your entire position in advance and move the balance to cash and /or liquid fund. But our CIO and the portfolio management team is of the opinion that this will give us an attractive entry point for good stocks which are normally traded at a higher level. We should be able to invest into good long term bets at an attractive valuation. Hence we are putting buy trigger at an lower level in your account and staying invested in good stocks in your account. It may lead to some negative movement in your valuation in the short run but will yield better results in the ling run. And also note we are keeping a large part of your portfolio in liquid fund and making cash available with us at this moment so that we can capture these good stocks at the right point Trust that is fine with you.

Now let me explain you what is causing this volatility and negative sentiments.

1. Rupee (INR) Depreciation:

The this emerging market currency crisis was all about how the problems of individual nations were spilling over into contagion — but without dollar strength as a factor.

No longer. A nine-year high for U.S. average hourly earnings in Friday’s non-farm payroll report, combined with the strongest reading for the manufacturing PMI index since 2004, have pushed two-year Treasury yields to levels not seen 2007. Add to this that the Federal Reserve is in no position to back off its quarterly rate-hiking cycle anytime soon or halt its reversal of quantitative easing. As my colleague Mr. Ram has pointed out, the global financial system has to get used to having fewer dollars around.

Supply side constraints leading to dollar appreciation.

2. Oil Price:

Depreciating rupee and strengthening oil prices making things worse as a large amount of money in dollar is going out to buy oil for net importers like us. Though we get oil n gas I n favorable terms from Iran but there has been constant pressure from the US to curb trade with Iran (refer recent high profile visit by US secretaries and under secretaries)

Metal /Commodity price volatility
  • Metals on LME
  • Aluminium down 2.4%
  • Copper down 0.9%
  • Zinc down 2.9%
  • Nickel down 1.5%
  • Lead down 3.1%
Metals in China
  • Zinc down 1%
  • Aluminium down 1%
  • Steel down 1.6%/li>
  • ron Ore down 0.7%
  • Crude overnight up 2.5%
  • Crude today up 0.8%

Effect of Chinese possibly removing winter production ban leading to higher supplies. Current Account Deficit (CAD): Higher spending on oil export coupled with the foreign investors taking money (read dollar) out from the system causing net Deficit in current account balance (Money or Dollar in minus money or Dollar out – in simplistic term. Refer enclosed graphics. But there is no reason to worry as RBI is one of the prudent regulators and has capacity to tackle this unlike countries like Turkey and Argentina. But this will lead to higher interest rate regime (negative for both stock and bond from capital appreciation stand point).

Hence .. please stay assured that your wealth is in right hand and we are ever alert to take the advantage of this market volatility to build a long term portfolio at an attractive entry valuation.

A recent Bloomberg article indicates what we have been discussing with you over that past few weeks.

Fund Carnage Shows Peril Of Ignoring Liquidity

Indian retail investors won’t easily forgive their fund managers, nor will they quickly forget this wealth destruction. Out of 416 open-ended, onshore equity funds, 401 have lost money this year. Tech funds, the only ones to have performed decently, have been helped by Asia’s worst-performing currency of 2018, writes Andy Mukherjee.

  • Fund managers who’d hoped for private-equity type returns by discovering jewels buried in the haystacks of public markets were essentially souping up performance by forgoing liquidity
  • Now that the markets are punishing them for that recklessness, the search for the elusive alpha is over — in infrastructure; power; banking and finance; small-, mid- and micro-cap shares; transport and logistics; value stocks; state-owned firms; business cycles; and every other fad
  • With fund asset values collapsing, what happens if investors get up and leave?