Do it yourself

Myth of free market

A fundamental principle of economics is that “in a ‘free market’ current price of anything having an economic value is a function of demand and supply of such things at that particular point in time.” Of course, there could be multiple factors that may impact the demand and supply of a thing; but usually nothing impacts the “price” directly other than the forces of demand and supply.

In a ‘controlled and/or manipulated market’ the prices of things are fixed by the controlling authorities (or forces); regardless of the demand and supply for such things. In such markets, usually demand and supply of things are controlled and/or manipulated; or demand and supply duly get adjusted to the fixed/manipulated prices.

In the modern world, money is arguably the largest factor of production in the world. The price of money (interest rate) should ideally be a function of demand and supply of money. In case of excess supply, the interest rates should be lower and vice versa.

If we apply this core principle of economics to the world around us, we may discover that a significantly large part of global markets is presently either controlled or manipulated. The free market may only be prevalent in textbooks now. It has been completely obliterated from the political speeches across the world; and is also being systematically removed from the policy documents.

The US Federal Reserve can simply manipulate the supply of the USD to influence the prices of bonds, goods & services denominated and settled in USD. An axis led by China and Russia is emerging to weaken the powers of the US to manipulate the global markets through controlling supply of USD. So far, it is more of an intention. There is no work-in-progress evident on the ground.

Removing all doubts

Notwithstanding all the grandstanding, global preaching, and progressive narratives, the US has mostly been a racist and sexist society. For many decades there was a pretense on part of the US politicians to present it as an inclusive, liberal and free society. In the ongoing elections the pretense has been shed. There is a conspicuous effort to make the contest between a Right wing, “white” supremacist “man” and a “woman who happens to be “black”.

Confidence of RBI

In its latest monetary policy report, the RBI has expressed strong confidence in the Indian economy. It projected the real GDP growth of 7.2% for FY25. It also sees the growth momentum sustaining in FY26 with 1QFY26 of 7.3%.

On the other hand, the brokerages are projecting material slowdown in profitability growth. The corporate tax collections for FY25, so far, are down 6% yoy. The core sector growth has collapsed to many months low in August. The capital expenditure of the states in FY25 is projected to be less than even FY23. The central government spending which has supported the growth since FY21 is also tapering. Private capex has picked up but is mostly related to asset (land and building) acquisition rather than enhancing productive capabilities.

I wonder where the confidence of the RBI is flowing from! Is RBI relying too much on the forward looking surveys indicating better business and consumer confidence for the future despite conspicuous deterioration in the current conditions? Or is there something not known to the markets; just like Haryana election results where CM Saini could clearly see what no one else saw.

INR, yields and rate cuts

RBI has apparently let go of the USDINR 84 level, which it was allegedly defending for almost a year. The FPI outflows are accelerating every week. The US0 India yield gap is narrowing, further raising the specter of accelerated outflows.

The benchmark US yields (now 4.10% rising 40bps after aggressive 50bps rate cut by the US Fed) and mortgage rate (now over 8%) have not behaved on the expected lines.

In India also there is almost a consensus over a repo rate cut in December. The MPC members might however be wondering whether it is desirable to waste one important arrow in their quiver at this point in time when there are ample indications of a crisis like situation emerging in 2025, requiring aggressive policy support. Given the market condition, a rate cut may not be passed on the borrowers as banks are already struggling with credit-deposit growth mismatch. The benchmark yields have already eased in anticipation of a cut and may not ease much post the cut. In any case, the RBI may not like the US-India yield spreads to narrow further, further pressurizing USDINR.

Once upon a time a sparrow couple made their nest in a wheat farm. In a few days, the lady sparrow laid four eggs. In two weeks, eggs were fully hatched and four chicks were born. In the meantime, the wheat stems had started growing tall. In another two weeks, the chicks started to fledge and the wheat kernels began to turn golden. This was the day when parent sparrows first discussed leaving their nest and moving somewhere else.

“The crop will soon be ready for the harvest. Our nest shall be exposed and trampled by the harvesters”, the lady sparrow feared. Her companion however was not worried as yet. “Nothing to worry as yet”, he assured her.

In another three weeks, the farm turned completely golden with wheat completely ripe to harvest. The lady sparrow was terribly worried now. “We must fly out now. The chicks have also grown up now and can easily fly to the woods behind the hill”, she argued with her companion. “Nothing to worry about yet. We have plenty of food here. Let chicks eat good and become strong”, the companion remained nonchalant.

In a couple of days, the farmer came to the farm with his wife. He looked at the ripe crop with pride and said, “we shall now call my brothers and begin harvesting the crop from tomorrow”. They soon left the farm. The lady sparrow was terribly frightened now. "Must fly out right now”, she coaxed his companion and chicks. “Nothing to worry for now”, the companion quipped, playing with the chicks.

After a couple of days, the farmer again came to the farm with his wife. “My brothers are all thankless and selfish”, he said annoyingly. I would help them whenever they need, but they have refused to help me in harvesting. I shall now call all my neighbors and begin harvesting from tomorrow. “I beg you please let’s fly out now”, the lady sparrow pleaded with the family. The children had become strong and comfortable in the farm by now. “Not yet”. The companion reiterated. The children agreed.

One more week passed, nothing happened. One day the farmer and his wife again came to the farm. He saw that the wheat kernels were beginning to wither now. The golden crop had developed many black spots. “We live in a world full of selfish and thankless people. We cannot count on anyone for help”, he said furiously to his wife. “Let’s buy our own tools and begin harvesting ourselves from tomorrow”, the farmer said resolutely. “Hey guys let’s get ready, it’s time to fly out”, the sparrow told his companion and children, with a sense of urgency. “What happened now” the lady asked. “Farmer have realized that no one helps those who do not help themselves”. He will definitely come tomorrow and begin harvesting, the companion explained.

In the past three years there have been many instances that made investors nervous about markets. The Russian invasion of Ukraine; ruling BJP reduced to a minority in the Lok Sabha elections, escalation of hostilities between forces of Israel and Palestine, Lebanon, Syria, Iran etc. All these instances raised the specter of a deeper market correction, provoking investors to lighten their equity exposure. The market however continued to belie their apprehensions, and continued to climb higher, simply because earnings were supporting. Now, for the first time in the past 3 years, earnings are showing fatigue and are expected to grow in single digit in FY25, with decline in margins. This is the time investors need to review their equity exposure and take corrective action.

As per the current estimates, FY25E NIFTY50 EPS is expected to grow ~8% (vs over 18% each for FY23 and FY24). FY26E estimates are presently hovering around ~15% growth but may see further downgrades.

In my view, earnings growth with margin improvement is the only sustainable factor for rise in stock prices. Rest all factors may add to the momentum, which if not supported by earnings growth, inevitably fizzles out in due course.

(Note: I had last shared my investment outlook and strategy for the second half of the year 2024, July 2024. Since then, there have been some changes in circumstances. Global central bankers have embarked on a policy easing path after more than a year. Geopolitical conditions have worsened. Stock markets have done very well and are close to the upper bound of fair value territory. Global economy is slowing down as the post Covid stimulated demand is waning. Accordingly, the corporate earnings growth trajectory is also flattening. I had accounted for most of these occurrences in my investment strategy in July 2024. Therefore, there is no notable change in my outlook and strategy for 2HFY25.)

In my view, the stock market outlook in India, in the short term, is a function of the following seven factors:

(1)        Macroeconomic environment

(2)        Global markets and flows

(3)        Technical positioning

(4)        Corporate earnings and valuations

(5)        Return profile and prospects for alternative assets like gold, real estate, fixed income etc.

(6)        Greed and fear equilibrium

(7)        Perception about the political establishment

The outlook for these seven factors for next 6-9 month is as follows, in my view—

Macroeconomic environment – Positive

My outlook for the likely macroeconomic environment in 2HFY25 is as follows:

(a)        Inflation: The consumer inflation may average close to the lower bound of RBI’s tolerance bound of 4% to 6%.

(b)        Fiscal Deficit: The fiscal situation of the central government may remain comfortable as the tax collections remain steady and revenue expenditure is controlled further.

(c)        Rates: Expect benchmark yields to average in the 6.85% +/- 15bps range. The RBI may stay on ‘pause’ for now and begin easing in 4QFY25. Deposit and lending rates may stabilize around current levels, the liquidity may ease in the forthcoming busy season as government spending accelerates.

(d)        Current Account: Expect current account balance to stay negative as import growth continues to outpace exports. The deficit may average around 1.25% to 1.5% for 2HFY25.

(e)        Savings: Household savings may continue to grow at a slower pace as real wage growth remains poor. Aggregate corporate savings though may be higher due to continued deleveraging and rise in free cash flows.

(f)         Investment: The government investment expenditure may sustain at current pace. Private capex may not see material recovery in 2HFY25. Overall, investment growth may be decent.

(g)        Exchange Rate: USDINR may average close to INR83.65 +/- 1 range.

(h)        Growth: The real GDP growth for FY25 may average around 6.75% despite a slower global economy, on the back of better manufacturing and good monsoon. Overall, macroeconomic outlook is positive.

Global markets - Neutral

The global analysts and economists are nearly unanimous on the growth decline in 2HFY25. The likely monetary easing and stable geopolitical conditions may support growth stability. The outlook for USD is neutral as central bankers remain on a corrective path.

Technical Positioning – Negative

Technically, in my view, the benchmark indices may witness a decent correction in 2HFY25. At present level thus Nifty offers a negative risk reward.

Technically speaking, Nifty may move in the 18910-26930 range in 2HFY25, averaging above 22635. There could be occasional violations of this range. Buying below 22700 will therefore carry a positive risk reward.

Corporate earnings and valuations - Neutral

The earnings growth momentum is peaking after three years of strong show. The visibility of margin improvement is clouded as capacity utilizations are high and companies are initiating expansion plans. Raw material prices are also now ticking up.

The present forward valuations are slightly above long-term averages based on still marginally optimistic earnings forecasts. However, 2HFY25 may not witness a material PE derating as macro fundamentals remain strong and visibility of flows is improving.

Alternative return profile - Neutral

Real estate: Real estate prices may not rise materially in 2HFY25 as more supply hits the market higher interest rates begin to bite and government incentives are withdrawn gradually.

Gold: Presently, the geopolitical and trade tensions are driving the global gold prices higher. We may see further rise in 2HFY25. However, on a 2-3 years horizon, gold offers a neutral to negative risk reward.

Cryptocurrencies: In the past couple of years, Cryptocurrencies have emerged as a notable alternative asset class. Being a new asset class the level of understanding and awareness about this asset class is still low, though the participation has risen exponentially. This combination of low understanding - high participation makes it highly volatile. Nonetheless, its popularity remains high and this trend may continue in 2HFY25 as well.

Fixed income: The corporate bond yields and deposit rates appear to have stabilized and may see some downward bias in 2HFY25. The yield gap is now not material. Overall, in my view, the return profile of alternatives is neutral for equities.

Greed and fear index – Negative

Historically, the most successful, though intuitive, indicator of greed overtaking the fear in the market is sharp outperformance of small cap stocks over large cap stocks. Besides, the volatility index, another gauge of fear, has remained low despite several concerns emerging.

The recent sharp outperformance of smallcap stocks and unsustainable euphoria in few pockets of the markets, indicate that greed is dominating the sentiments. The Greed and Fear balance therefore is negative presently.

Perception about the political establishment - Neutral

Strong commitment to promote manufacturing in India; positive outcome of thrust on self-reliance and firmly controlled fiscal balance is keeping markets’ perception about the political establishment positive. However, any significant losses for BJP in the assembly elections scheduled in 4Q2024 may require a review of this position.

Outlook for Indian markets

In view of the positioning of the above seven key factors, my outlook for the market in 2HFY25 is as follows:

(a)   NIfty 50 may move in a large range of 18910-26930 during 2HFY25. It would be reasonable to expect low single digit return for the 2HFY25 on diversified portfolios.

(b)   The outlook is positive for Metals, IT Services, Pharma, Specialty & Agro Chemicals, organized retail and consumer durables. Financials are neutral.

(c)    Benchmark bond yields may average 6.85% +/- 15bps for the year. Long duration yields may continue to do better in 2HFY25.

(d)   USDINR may average close to 83.65+/- 1 and move in the INR82.5-85.2/USD range.

(e)    Residential real estate prices may ease in most metro and large cities.

Some key risks to be monitored for the market in 2HFY25

1.    Weather conditions especially La Nina hitting the rabi crop.

2.    Worsening geopolitical situation in Europe and Asia.

3.    A recession forecast for FY26.

4.    Sharp rise in credit cost for lenders.

5.    Unusual rise in rural stress.

2HFY25: Investment Strategy

Asset allocation

2HFY25 appears to be worse than 1HFY25 as the market technical have worsened. Accordingly, I am keeping my primary investment objective to “low returns and capital preservation”. I believe that the market may continue to offer attractive opportunities to build a good portfolio for the period beyond FY25.

I shall continue to maintain standard allocation in 2HFY25; and increase active trading in my equity portfolio to optimize return. My target return for the overall financial asset portfolio for 2HFY25 would be 8% annualized.

Equity investment strategy

I would maintain a 60:30:10 mix of large, midcap and smallcap stocks.

(a)   Target 18% annualized appreciation from my trading portfolio;

(b)   Overweight on Chemicals (specialty and Agro Chem), IT Services, Pharma, organized retail and niche consumer stocks.

(c)    Underweight on financials and avoid PSUs.

1.    A study released by the market regulator SEBI, highlighting that 93% of traders participating in the Indian derivatives markets end up losing money. In the past three years they have lost over Rs1.8trn, trading future and option securities. Most of these were household (retail) traders, who declared an annual family income of less than Rs five lacs each. A few institutional and high frequency traders made gains at the expense of these retail traders. Intermediaries also gained substantially through brokerage and other charges.

The market participants, observers and policymakers are now debating (i) whether the large players are manipulating the market to dupe retail investors; and (ii) whether the entry of small traders should be restricted in the derivative segment of the securities market.

In the meanwhile, as per the SEBI survey, about 75% of the traders who lost money in trading derivatives in the past two years, have indicated that they would like to continue trading.

I have expressed my views on this on many occasions (see here). I may reiterate, in my view, the regulators should be concerned about systemic risk management and not get into the morality of the trading practices of traders. They should focus on imposing adequate margins and preventing market manipulation. Creating additional entry barriers (higher contract size, income & networth criterion, etc.) will only push the traders towards unauthorized/illegal markets, that will not only cause them bigger losses but also take the manipulators of their regulatory ambit.

2.    The broader markets are sharply underperforming the benchmark indices. It is common to hear investors complaining that while the benchmark indices are scaling new highs every day, my portfolio value is not moving higher, or even declining.

This remorse may be driven by misplaced perceptions and unrealistic expectations. I note that since the Covid bottom of March 2020, the benchmark index Nifty50 has yielded a return of ~200%, while the broader market indices Nifty Smallcap 100 (396%) and Nifty Midcap100 (378%) have yielded almost 2x returns as compared to the benchmark Nifty50. Even in the past three months Nifty Midcap 100 (+9%) has performed in line with Nifty50 (+9.5%). Nifty smallcap 100 has also yielded a positive 5.6% return.

In my view, the sharp outperformance of broader markets shall get corrected to a large extent in the course of next 12 months, as has been the case in all market cycles. This convergence of performance is usually achieved in phases. In the first phase, the benchmark indices rise, whereas the broader markets either rise less or decline slowly. In the second phase, the benchmark indices decline and the broader markets decline sharply. We might be currently in the early stages of phase one.

3.    The US and Chinese central bankers have embarked on an aggressive monetary easing program. The market participants are debating the likely impact of this round of monetary easing on markets, especially the commodity prices and consequent inflation.

I am neither an economist, nor a research analyst. Nonetheless, I understand two things – (i) the policy actions take time to reflect in the economic data; and (ii) more often than not the policy measures initiated under duress, may not have the desired impact.

I note that even before this round of monetary easing, the global markets were trading at all time high levels; JPY carry trade was unwinding; the US benchmark yields have risen after the aggressive 50bps Fed rate cut; and crude prices have fallen. I am yet to figure out what this monetary easing will achieve in the short term, except panicking traders that all may not be well with the economy and aiding speculative trade in sub-prime debt and EM equities

Though I am not fearful this morning, I would like to maintain my extremely cautious stance on my investment strategy. 

Global economy slowing

The RBI paper highlights some areas of concern for the global economy. In RBI’s assessment global growth has lost some speed in the first half of 2024 relative to the preceding semester, and momentum has slackened further in the third quarter.

The paper notes, “All around, indicators point increasingly to slowing global economic activity, more so on the eastern shores of the Atlantic, which vindicated the ECB’s September rate cut to secure a soft landing. In the US, the now famous remark – “The time has come for policy to adjust” – has built up expectations that the economy is gaining prominence in monetary policy discourse. In China, even though consumer inflation has picked up modestly due to supply constraints related to extreme weather, weakening producer prices are fueling concerns that deflationary forces are taking root. A rising number of manufacturing industries face lacklustre demand alongside a deep property market downturn now into its third year.” In particular—

Job growth is getting softer than initially anticipated as labour markets continue to slow down, unemployment rates are ticking up and wage growth is easing, although historically high immigration is providing some offset. Consumer confidence surveys show a deterioration in sentiment about jobs.

Equity prices are still stretched but the crash in Nvidia’s stock in early September wiped out about US$ 300 billion in market value, hinting that the artificial intelligence (AI) overhype may be tapering off and expectations are catching up with reality.

Parched returns are drying up the venture capital ecosystem. Record volumes of corporate debt are being issued to head off the volatility triggered by worsening macroeconomic data, and to benefit from falling borrowing and refinancing costs.

OPEC plus has decided to delay a planned output increase as crude prices slumped below US$ 70 per barrel briefly on September 10, but it still plans to revive 2.2 million barrels per day of idle supplies over the course of 2025. Meanwhile, non-OPEC supplies are rising faster, and as the International Energy Agency warns in its September 2024 report, global oil demand is slowing sharply – electric vehicles are already displacing 1.8 million barrels of oil every day – and this is fuelling the sell-off in oil markets. In metal markets, the copper-gold price ratio is closing on to 4 – a rising ratio indicates higher industrial demand and hence a positive growth outlook.

Although upside pressures have likely been seen off, the pace of disinflation remains sluggish, provoking caution among monetary policy authorities about the pace of easing. In fact, the Governing Council of the ECB noted in its September meeting that inflation is expected to rise again in the latter part of this year, partly because previous sharp falls in energy prices will drop out of the annual rates.

Defying gravity, global merchandise trade volume continued to recover in the third quarter of 2024, according to the latest World Trade Organization (WTO) Goods Trade Barometer, amidst rising geopolitical tensions, ongoing regional conflicts, shifting monetary policy in advanced economies (AEs) and weakening export orders. Barring the sub-par performance of electronics, other components of global trade such as automotive products, container shipping and air freight are all firmly above trend, but new export orders are turning down, and raw materials have declined – causes for concern going forward.

EMEs are building up a growth rate lead over AEs to levels not seen in 15 years. Projections suggest that the proportion of EMEs other than China in which per capita GDP is likely to rise faster than the US is on course to surge from 48 per cent over the past five years to 88 per cent in the next five years.

In the recent period, the US dollar has weakened; historically, this has led to greater capital flows to emerging markets.

The global supply chain pressures index (GSCPI) increased in August 2024, rising above its historical average for the first time since November 2023. Geopolitical risks remained high due to continued tensions in the Middle East, albeit with a sequential moderation in August 2024. Supply disruptions have kept container shipping costs elevated, although they recorded some moderation during August-September 2024 from the peak levels recorded in July.

Domestic economy

The RBI sounds quite sanguine about the domestic economic growth, regardless of the soft 1QFY25 data. The paper cautions, “more needs to be read into the slowing of India’s GDP in Q1:2024-25 than just disappointment.” It points out that “The seasonally adjusted momentum of Q1 GDP was strong. Gross value added (GVA) growth actually rose sequentially in Q1, but the increase in subsidies – 3.6 per cent by the Union government and 26 per cent by the states – offset the gains from showing up in GDP growth.”

Household consumption is poised to grow faster in Q2 as headline inflation eases, with a revival of rural demand already taking hold.

The widening trade deficit and a spurt in overseas travel by Indians is likely to swing the current account balance from a small surplus in January-March 2024 to a deficit of 1-1.2 per cent of GDP in the first half of 2024-25. Capital flows in the form of portfolio debt flows, net FDI and non-resident deposits are providing comfortable financing.

Merger and acquisitions deals have been on the decline in the Asia-Pacific region in 2024, but India has emerged as a bright spot with an increase in volumes.

Agriculture suffered in Q1:2024-25 as India experienced the highest number of heatwave days in the summer of 2024, surpassing the previous high in 2010.

The underperformance of agriculture in Q1 was compensated for by a buoyant manufacturing sector and resilient services.

Global funds have been investing heavily in the Indian debt market for the fifth month in a row since May 2024. On the other hand, corporate debt issuances remained low during the financial year so far despite easing yields as issuers awaited the US rate cut.

In the credit market, with deposit mobilization becoming a challenge, banks continue to rely heavily on certificates of deposit to meet funding needs so that lagging deposit growth does not constrain credit. Banks are also offering higher interest rates on deposits, with more than two-thirds of term deposits earning 7 per cent and above. The gap between credit and deposit growth is, however, beginning to narrow. Non-banking financial companies are increasingly turning to offshore bonds. Microfinance institutions are facing some asset quality issues, warranting slowing down the pace of loan growth.

Headline CPI inflation came in below the Reserve Bank’s target for the second consecutive month in its August reading. This is a positive development, especially as the index has remained flat between July and August.

Surplus liquidity in the banking system moderated in the latter half of August, driven by build-up of government cash balances due to GST payments. In early September, however, a pickup in government spending led to the return of liquidity to the banking system. Overall, the average daily net absorption under the liquidity adjustment facility (LAF) decreased to ₹1.45 lakh crore during August 16 to September 17, 2024, from ₹1.52 lakh crore during July 16 and August 15, 2024.

I find many events, besides rate cuts and elections, that are occurring on the sidelines that need to be noted by the investors. Considered individually, these events may not look like triggering a meaningful move in global markets. However, if we take a collective cognizance of these events, the probability of global market shock would certainly rise by a few points.

The following events, for example, have drawn my attention in the recent months.

Central banks loading on gold

Post the global financial crisis 2008-2009, the central banks have significantly increased their gold accumulation. In 2023, central banks added 1,037 tonnes of gold – the second highest annual purchase in history – following a record high of 1,082 tonnes in 2022. The trend is continuing in 2024 also. (see here)

The notable thing in this trend is the sharp rise in gold accumulation by the Russian and Chinese central banks. President Xi and President Putin, along with Iran and North Korea (CRIK) are seen as an informal anti-NATO alliance. (see here)

Biden provides fresh impetus to the Sino-US tariff war

The Biden administration has provided significant impetus to the Sino-US tariff war started by the Trump administration. Despite strong objections from the domestic industry, the US has not only retained the tariffs imposed on the Chinese imports by the Trump administration in 2018, but made some material additions to the list. The new tariff list includes a 100% duty on Chinese EVs, 50% on solar cells and 25% on steel, aluminum, EV batteries and key minerals.

Besides, the Biden administration announced new measures aimed at Chinese e-commerce platforms to minimize the low-value imports eligible for duty and tax exemptions. (See here)

Putin mediating thaw between India and China

The rhetorical aggression between China and India has decelerated materially in the recent weeks. It is reported that China is retracing from its advanced positions in the Indian territories and willing to disengage completely. Apparently, it has occurred after the recent visit of PM Modi to Russia and Ukraine. (see here) This is obviously an important geopolitical development after the coup in Bangladesh, allegedly with support of the US. (see here)

Hedge Fund piling on short positions

In the past few weeks hedge funds have been piling on their short positions. They have now been net sellers for the five consecutive weeks, not a normal situation when the benchmark indices are making all-time highs.

Chinese economy imploding, govt puts a tight leash on investment professionals

All the recent data about the Chinese economy indicates that the Chinese economy is slowing much faster than previously estimated. As per the current estimates, China is most likely to miss even a modest 5% growth target. (see here) By all indications the Japanification of the Chinese economy is happening against the wishes of all. The Chinese economy has been the engine pulling the global economy in the past two decades. If this engine falters, it cannot be good news for the global economy and therefore markets.

The Chinese authorities have been taking action against the entrepreneurs, like Jack Ma of Alibaba, failing to adhere to the strict regulatory norms. Recently, the authorities cracked down on financiers – impounding passports of 8700 investment bankers and restricting their overseas travel. (see here)

This could be seen by some as a precursor to a massive shift in the economic development followed in the past two decades. (see here)

Traders incurring losses despite market rally

On 12^th September 2024 (weekly F&O expiry day), many option traders in India experienced exceptional losses due to sharp surge in the benchmark indices in the last hour of trading. It happened again last Friday. This has happened when sharp underperformance of the broader markets and popular stocks is already bothering the non-institutional (retail) investors. In the technical analysis parlance, these are conspicuous signs of a large-scale distribution taking place. Empirical evidence suggests that this phase of the market is usually followed by a dull period in the market, marked by poor returns.

It's still the month of September and on my morning walks, I can feel the chill in the air. This is not usual weather in Delhi NCR. I am getting the same sense in markets. If you are also feeling this chilling sensation, please do share your views.