Originally Posted by Atiker
I don't have the courage to buy in this market, but at the same time I can't mutter strength to sell and sit on the sidelines.
Relax. You are doing the right thing.
Buying at these levels is too risky.
Hold your stocks if the respective companies are
showing positive earnings growth.
There are serious problems in the economy and only consumption part is holding.
Eternal bulls are talking about "green shoots in the investment side of the economy", but they have been doing the same for a few years now.
Saw this interview on CNBC TV18 yesterday:
Restructuring of non-core businesses likely in next 30-months: AM Naik, L&T - Moneycontrol.com
Q: So, when you hear things like the Commerce Minister is now calling private investors to look at the possibility of getting private investment to move, to pick up, do you see any signs of that because as you pointed out, capacity utilisation?
A: I really do not see any major investment forthcoming because you can say 65 percent of those who invested heavily in the past are under financial restructuring with respect to banks to repay the loans and so on. And balance 30-40 percent, the cycle of investment is nearly over.
The fact is that many companies already have excess capacities much beyond what they are producing and there is no real need for fresh investment. Demand growth is nowhere near what it used to be in 2002-2007 period and thus companies are in no hurry to invest.
SBI's recent report accepts that there is a serious problem in the economy:
Economic slowdown not just technical, it's real.
“While it is true that the economy has undergone too many structural breaks since November 2016, and that may have precipitated a transient slowdown, it will be unfair if we only call it transient. A slowdown in demand has only aggravated the situation,” it said hinting that the slowdown is for real. Private sector capital formation is also languishing as resolution of stressed assets is yet to happen. “This situation demands that the government steps in and uses the fiscal policy as a tool to rev up the economy,” SBI report said.
The bigger problem is that now taxes are falling short of targets too.
GST: India eyes spending cuts as glitches in new tax hit revenue
India could be forced to cut spending on key infrastructure such as railways and highways as lower-than-expected tax collections and sluggish growth have upset the government's budget calculations, two finance ministry officials said.
Demonetization and the messed up GST implementation has wreaked havoc on the unorganized and SME sector. There is a risk that the problems of the smaller businesses may spread to larger businesses in the form of demand destruction.
Stock market valuations are totally out of sync with the reality of the ground. US markets are rallying and everyone else is following.
Liquidity can take the markets even higher from here, but investors must now be very alert and keep stop-losses for their long trading positions.
Investments should be restricted to stocks where there are real earnings and real dividends, not just stories that "so and so will happen and that will lead to high earnings in future".