RBI disappoints markets

Blog meant for 8 Dec 2016 Thursday

Dear friends,

Nifty fell by 41 points mainly due to the disappointment that RBI did not cut interest rates as was expected by many people. Majority of investors were expecting a rate cut by RBI and hence markets were trading positive until the announcement by RBI. However, markets recovered towards the end of the day to close only 41 points lower.

However, the global cues all over the world have been positive and hence hopefully markets can recover slightly from the negativity of the last few days.

There is no change in the indications for short term:

Nifty is in Don’t Buy zone. As per 30 days moving average graph, the following are the indications for short term –

Don’t Buy – Titan, L&T, HDFC, M&M, Axis Bank, HDFC Bank, Maruti, TCS, Infosys

Hope long term investors have been continuing to invest on a monthly basis. Many of the bluechip companies are trading at prices which are much lower than a few months back and hence we must not miss the opportunity to invest in them.

Regular investing for long term will help benefit from the power of compounding and when we decide to sell after 10-15-20-30 years, the stocks would have grown at a good percentage and much better than other investments such as bank, real estate and it would be tax free.

The entire index such as Nifty or Sensex has appreciated by average 16-17% p.a. for the last 20-30 years. We can hope and expect similar returns if not more in the future too. Also note that 16% per annum without tax is like 23% per annum and then paying 30% tax. Hence, it is a very good percentage return.

All the best!

Dr.Bharath Chandra