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Info 7

Take Action

Fortnightly Close Dow Jones Nasdaq Nifty Gold Crude Oil
US Dollar Index
Previous 27930 11311 11370 1947 42.30 93.20
Current 28133 11313 11333 1940 39.50 92.97
Change (%) 0.73 0.02 -0.33 -0.36 -6.62 -0.25

What a fortnight it was!!!  

So much of action in the market, but at the end of the fortnight we are back to the same point from where the fortnight began.  

Look at the change in percentage in the above table, it is the best example to show that at times market just moves to eat out trade stops and get back to the same point.  

The massive sell-off in Nasdaq was due and it happened very fast, and that is what we said in Apaarr Note 6 that it would be a quick fall. That’s the fabric and nature of the market and it repeats time and again. Though obviously, different news and reasons will emerge every time, and this time it is said that Softbank had taken massive derivative options positions which lifted Nasdaq up by 8% in a week and when those bets were closed, the ripple effect was a sell-off in the market which brought it down by 10% in two days.  

With the kind of liquidity available in the market, we may see some bounce back soon but it would most probably be sold off to take us few percentage points lower and make the frenzy fizz off. Use this swing to lighten it on generic equities and stay invested in specifics where there is the scope of next wave of appreciation.  

Sep till Nov, we would see volatility due to the US presidential elections. But in general, the theme would be sell richly valued stocks and get into undervalued investments. Precious metals and soft commodities will have the action in the coming months.  

Take Action:

Markets are driven more on psychology and less on technical and fundamentals. Market swings are created to instill fear and fuel greed and if you start understanding these forces then it is time to take action.

Actions For Now:

  1. Reduce equity exposure of richly/highly valued stocks
  2. Invest in precious metals in a staggered manner at crucial events/levels, they are coming
  3. Exposure to currency has to be hedged rightly to benefit from the next wave of swings in currency prices
  4. Preserve wealth by using options strategies on long portfolio

The word wealth reminds me of how most of us get confused with money and wealth.  

  • Making money is about returns; creating wealth is about sustaining returns over a long period of time
  • Money can be made from a  highly risky bet going right; remaining wealthy demands knowledge conservatism, consistency, and tons patience.
  • Money is status; wealth is empowerment

Market Commentary 

Run up in coffee from $110 to $130 indicates money is moving it to soft commodities. We like coffee and sugar as soft commodities that are at the cusp of a multiyear bull pattern formation.   


We may be grinding down slowly to reality, though sell-off looks attractive, but there is a lot of pressure and it is best to wait it out for a few months. Let the frenzied crowd burn out, looks like it has just begun.     


As expected, USD has found its support at 92 and would remain for a while to test the 94-95 ranges which should be used to sell as we are heading lower on USD sooner or later to 88.Exporters need to have a hedge plan in place to battle such drastic moves.    

We believe short selling EURO is the best of trade in the currency pack in terms of risk-reward ratio. USDINR rang has shifted down as RBI stopped absorbing USD, big indications for exporters to get ready for eventual 68 on USDINR. Get the hedges and protect the business.  

Crude Oil

What a move in crude, as written in the last Apaarr Note 6, Crude oil is below the $40 mark. This a pure stop-loss eat out downswing, soon it will bounce to $46 due to declining rig count. So the first trade for the coming week will be buying crude oil ETF.      

Metals: Gold Silver Copper

We expect the stage is set for a cool off in Precious metals in a similar fashion like equities. But keep the levels in mind and lap it up as we have a long way to go in precious metals. Key levels for Gold $1860 and Silver $24, though we may add platinum and mining stocks on those selloff days.    

We have a list of US ETF to invest and ride this rally.  

Copper and other industrial metals Copper broke $6500 and now it is gaining speculative momentum, traders play zone is activated.    


These are information, views of best of minds, and my humble opinion, take the trade and investment decisions based on your risk profile, objectives and asset allocation. There are times we need to sit on cash and wait for the market to correct and there are times when we have to stay invested and allow the market to move up. In short, inaction in the market is the most rewarding act, once you are set on a clear plan. So fill up buying orders on asset class where there is a need to allocate funds and reduce priced up assets to keep cash for better times.  

This is a complimentary note and can be circulated with friends and family members. Advisory is always one to one and this note has no relation to the advisory. We may share views but this piece is not to be considered as advisory. A note may have mention of various authors/videos/views, which are sourced from the internet and respective owners own them and have made it available free for all, it is reproduced here for awareness.  

You can drop a mail to [email protected] for blocking time for your queries on taking things forward and working together on any of our core services. 

Written by

Punit Sethia, Sep 06, 2020