Tug of War - Rating Upgrade, GST, Monsoons Vs Bad Earnings, Personal loan, MFI stress I HDFC Bank Bonus Stripping I Chettiars

Top Power Producing Countries - Power will be a very defining force and especially with AI, EVs, and more

(India 10 year bonds yields fall a bit on the upgrade - however the action will be more on Indian companies wanting to raise funds overseas which will see better demand - A very positive signal and we feel with the government's intent of spurring growth, interest rates might come off a bit more and the 10 year should head towards 6%) 

• A week filled with several developments - viz. India's rating upgrade, GST reforms, MF inflows at all-time highs, and finally a neutral Putin/Trump talks.

• Markets with all the positive developments will have a great head start on Monday, with GST being the biggest one that will help assuage concerns on stagnated growth.

• We would not suggest doing panic purchases and stick to the plan that we have been following, which has worked well - Balanced Adv Funds (ICICI), STP over 6m (HDFC Multi 50:25:25), SBI Large and Md Cap (STP over 3m) and  Nippon Nifty 500 Equal Wt Index (STP over 6m).

• Positive Triggers and Status for Markets - Thrust to domestic consumption (GST + Tax slab increase ), good monsoons, low interest rates, and possibly going lower, bank balance sheets in good stead.

• Negative Triggers - Escalation in the tariff war (Irrespective of what the belief regarding the endurance of the Indian economy, if this tariff war escalates, there will be a strong impact in certain sectors, which in the short term will have an impact on markets, slowing consumption data, and tepid earnings season.

• Liquidity, which continues to be very strong, and we have been saying this for the past 3 years, when the tax on debt funds was levied, that the government, by design, wants us to:
a) Spend more and
b) Invest in equities Vs fixed income
And this will continue to provide support to equities.
Unfortunately or fortunately, investors are comparing fixed income returns of 5-6% vs equity returns of 13%-15% and going all-in equities, which is a double-edged sword.

• Lastly, HDFC Bank's bonus date is set for the week after next  - for investors who have tax liabilities of a 30% slab, this could provide an opportunity for bonus stripping (Keep in mind this is complex and one should be careful while doing this and should be done under expert guidance. Also, for anybody indulging, please keep in mind that for the tax authorities to allow the loss, you have to have either bought the stock before 3 months of the ex date or sold after 9 months. So if you buy now, you can’t sell any stock for 9 months from the record date.  

• Succession Feuds in India

• The Chettiars (Bankers of the East)

• Equity flows hit record highs

• Company treasuries investing in Bitcoin

• How F&O destroyed a family

• US begins probe against India solar imports

• HDFC Bank's bonus issuance