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My Short-Term Outlook on the Indian Stock Market

Dec 11, 2019

Vijay Bhambwani, Editor, Fast Profits Daily

Hi, it's Vijay.

Today, in the Fast Profits Daily, I want to share my outlook on the market.

I've done videos on topics like the US presidential election cycle, the Santa Claus rally, and the union budget.

Today, I'll try to put all these three ideas together and provide a broad outlook up to the budget.

  • Why I'm bullish on the market up to the budget.
  • What I expect FIIs will do now.
  • Which sectors should you watch out for in the budget?
  • The one reason I'm positive on the market even after the budget.

Enjoy the video! I'll be back again tomorrow in the Fast Profits Daily.

Until then...

Hi,

This is Vijay Bhambwani. I'm back with you again to talk about the market outlook for the next couple of months.

In my previous video, I have shared with you, ideas about how the US presidential election cycle, why a Santa Claus rally occurs, and what you can expect sectorially from across the budget.

Now in this video, I'm gonna try to put all these three ideas together and provide a largely broad outlook up to the budget.

Now, this is the month of December as we speak. Here, the FII fund managers are now preparing to wind down the year, go back home slightly before Christmas to their countries, and collect their performance bonuses, which means, they've either booked their profits or on open positions that they have, they will try and ensure that NAV is boosted.

Which is why, in the months of December, what you have is called a Santa Claus rally. You're probably seeing that across in action on your trading terminals as I speak to you.

You are seeing that markets have very shallow declines and slightly larger rallies and even if the markets do decline for a day or two, the declines are getting bought in to. Now this is the Santa Claus rally in process.

Come the month of January, you will see that it's the beginning of the new calendar year and the beginning of a new financial year for the FIIs.

You know, when I was a kid in school, my teachers told me, the best way to appear for exams is to answer those questions first, to which I was confident of knowing the right answers. The reason behind the psychological trick is to give a feel-good factor to yourself that the question paper is being answered well. Well begun is half done.

So when the year begins on a bullish note, it is easier for the mutual fund industry to go out there to the investors and ask for more money to invest in their fund schemes and which is why, I expect the month of January to be a largely bullish one.

And here again, you're going to see warehousing taking place. The month of January, therefore, tends to be a largely bullish month.

Here again, on your trading terminals, you will see declines being shallow and if it all there is a day or two of declines, you will see that the declines are gearing bought into.

What sets January apart from December is that unlike December, where fund houses, especially the fund managers who are away to their parent countries for Christmas holidays, and therefore turnover tends to fall, in January the turnover is actually higher.

It might actually hit a new high because you have a budget in the next month and warehousing and front running on account of the local brokers, high net worth individuals and traders, trying to second guess which blue chips the FIIs might invest money in the coming year.

So the month of January is full of expectations and I might say bullish expectations because you have the budget and there is always a feeling that FIIs would raise allocations to India.

And the next would be the biggest trigger of all - The Union Budget.

Here again, like I have mentioned in my earlier videos, the budget will basically determine how the government is going to allocate money to certain sectors. There are certain sectors which are evergreen sectors.

For example, the fertiliser industry. You are likely to see more and more sops to the fertiliser industry and therefore prospects will look greener.

You will see infrastructure spending, which again is a favourite sector. You are likely to see increased taxes on the vices industry. For example, the alcohol, the cigarette industry, and the junk food industry.

Much of what will happen after the budget will be determined by the actual budget announcements and I am sure I am going to be doing a lot more videos for you on this subject after the suspense of the budget is out.

But over and above the budget, there is also the US presidential election cycle which is why I have said in my earlier video is the reason why am bullish on the markets till, at least, November 2020. The US will try to keep the markets afloat and rising, the dollar strong, and a feel-good factor all year around.

So my guess is the Indian investor is likely to be in for a good time. As long as you invest sensibly in good stocks, you're going to be doing just fine.

This is Vijay Bhambwani signing off from you today and before I go, let me remind you to hit the like button. Subscribe to my channel if you're watching this video on YouTube and do not forget to share this video with your friends and family.

In the comments section, let me know what you think of this video and what are the subjects you would like me to cover for you in my next videos.

Take very good care of your investments.

All the best.

Warm regards,

Vijay L Bhambwani
Vijay L Bhambwani
Editor, Fast Profits Daily
Equitymaster Agora Research Private Limited (Research Analyst)

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1 Responses to "My Short-Term Outlook on the Indian Stock Market"

vasudev

Dec 11, 2019

Hi
can you clarify on your comment on Dec month when you say FII will book profits etc etc to get their bonus- in that case we will have FII outflow is it not ? and this will bring the market down not hence not go up or bullish - as we know FII flows have a big impact on indian market.

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