16.05.2019

What ails the Bourses now?

The Share markets for the past 10 days has been mostly in the grip of  ‘Bears’ and the market which was  swinging on both sides-up and down for many days prior to  the present crisis, has been continuously, closing in red. Why? What ails the market now?

As the oft quoted saying that ‘When U S gets cold, all markets  sneeze’ is true at present. Mr Donald Trump, the most vibrant President the U S has ever faced, having been a Businessman  for long knows the nuances and intricacies of  Taxes and the revenue the his country needs. He knows where the shoe pinches. He is time and again discloses his intention to tighten up the sectors wherein U S possibly could gain by way of “Import duty” to earn more revenue and to discourage foreign goods and services to enter into U S.

China being a dominant player of exports to U S A with huge Dollars to their credit is seen by Mr Trump  as the villain in taking the full advantage from U S. This eyesore is the prime reason for Trump to declare that U S would increase the import duty on Chinese products worth $ 200 Billion from 10 % to 25 %. And China in turn, tit for tat, proposes to hike the reciprocal import duty for U S goods in the same way. This has eventually led a Trade(cold) War with a lot of uncertainties and might lead to a lot of trade imbalance. This has really shaken the market sentiments to a large extent. Mr Trump has not spared India too. He also plans to replicate what he does to China to India too soon but has given time till the election process is over. Already Indian exports are dwindling and the trade gap is widening. Mr Xi Jinping, President of China is in no  mood  to accept the U S dictate but prefers to retaliate.

These unhealthy developments have indeed hindered our markets. The FPIs are seen to be sellers in such an environment.  The embargo being imposed on India in the matter of import of oil from Iran is also another factor. The annual corporate results of many companies have also been bland. The general election results outcome is one another feature weighing  in the minds of the investors at large. So what should be done now?  The best thing is to patiently wait and watch the evolving things in the next fortnight to arrive by which time some clarity of events and consequences may emerge, including the  election results. Till then keep the fingers crossed!

Wish you all a value-investing based on informed decisions!

For all your investment needs, reach Goodwill- just a phone call away from you !