1. Fed gives a surprise. No rate hike this time. Most likely in March. That calls for a 'small' party. Especially in tech names.
IT took support and bounced somewhat from a very critical zone. Expect some decent pullback here now.
3. However, the issues for further pressure on the market remains. Once budget is out of the way, there is good possibility market again gets into decent pressure for sometime. Better to take profits in the upcoming rally...
4. Sit on cash or invest in gold (even gold loan companies may outperform - preferred pick Muthoot Finance).
Shifting to large caps and shunning most of SMID Caps would be my strategy till March end.
5. I would continue to hold decent chunks of IEX and CDSL/BSE through this correction phase. But other stocks would come under knife - to get trimmed or removed - if they don't perform as per expectations.
US 10Y bond reaction is completely different from what I was expecting. I found Fed's statements to be quite balanced. Controlled aggression. But Bonds are telling a different narrative.
Any Bonds experts here . Any idea?
US 10Y yield
• • •
Missing some Tweet in this thread? You can try to
force a refresh
1. Why are FIIs selling Indian stocks so vigorously?
Well, a number of factors. It's actually a domino effect.
And it all begins with the same story…
The day FED decided to go hard on inflation.
2. In layman terms, FED regulates the flow of dollars in the world. For last many years, after the 2008 crisis, they have been printing dollars recklessly to help US Govt fund several economy stabilizing projects by buying US bonds.
3. US 10Y, 30Y bonds are basically a kind of internal debt that the govt raises to run its projects as it has been running into huge deficit for quite sometime.
1. All options given are good depending upon trader's risk taking capacity.
By squaring off sold leg of your current call spread, delta of the strategy increases sharply. Risk is reversal of the stock leading to loss of profit in the long arm.
Maintain a tight SL in this case.
2. If the price action is such that it increases your conviction on the stock upmove, adding naked longs is like pyramiding. After all, if you can't capitalise on favorable moves, then when will you make money?
I prefer this with SL and regular profit taking on fresh longs.
3. Adding more of the same call spreads is a cheaper way to increase exposure to stocks' upmove. Many brokers block only the spread exposure and at times that could be lower than buying naked longs. Thus better use of margins and a natural SL due to hedging.
Con: Slow profit
Market View 2022: 1. Over the next few months, a lot of macro developments would impact our economy and markets.
The biggest being Fed's relentless watch on American inflation. They are hinting at very sharp interest rate increases, then stopping asset purchases (QE) and then ..
2. ..reducing their balance sheet as well.
The impact would certainly be drying up of liquidity around the world.
Sudden spike in bond yields which is already in Play.
Sharp rise in Dollar strength.
And if done unabettedly, this will shake every market out there very badly.
3. Frankly, I never thought Fed would go on this crusade so soon and so hard.
So are we in for tough 2022?
Well, that depends on what you compare it with!
Compared to last 1.5 years, Yes, the going is going to get very tough.
Why is Market getting tough?
Monetary tightening has begun around the world. Central banks pulling out liquidity and looking for increasing interest rates.
This essentially means that easy money is going out of the system. Out of markets. (1/n)
This is actually the reason why FIIs have been relentlessly selling Indian equities. Once the next many months, finding capital is going to get tougher. And so the markets could see those animal spirits missing going forth.
(2/n)
Fundamentally good companies and good valuations would be spared to some extent. Bad fundamentals and rich valuations would not be.
We will be seeing a lot of fake breakouts and suddenly the success ratio of technical set ups would go down. (3/n)
Overwhelming response for the previous thread. However, I think people missed a crucial point there.
The calculation I have done is for staying profitable after taking a reasonable risk.
As humans, we don’t have the tendency to stop. Growth is life. And that is desired.
(1/n)
However, you first learn to crawl. And then walk. Then run.
If you are doing 25%+ p.a. on a consistent basis - atleast for 3 consecutive years, then you are free to explore higher horizon of returns. You have capital and skills, then target higher returns by all means. (2/n)
No one is going to stop you from doing that.
But how many twitter traders (or any trader for that matter) can truthfully claim that?
Half of them are low on capital and almost other half is low on skills. But all of us want to earn 50%+ p.a. (3/n)