Though Sensex is on a strong up trend but global economy is weak and risk of a global recession is rising. We have been focusing on the US economy as it is world’s largest economy and its currency is the world’s reserve currency. The last recession had originated in US and the next global recession will also come from here.
2008’s recession was created by sub-prime housing loans, and this time also the housing sector seems to be
the trigger. The reason housing is always so critical is because of the size of this sector – it is a huge sector in almost all the countries. In US it contributes about 9% of the GDP, in India this figure is 13%.
We have posted a detailed article under our research blog describing why housing sector in US is a bubble, it can inflate further, and why when it bursts, the impact will be much worse than that of the 2008 crisis.
Read the article here – https://www.trikaalcapital.com/index.php/research/blog/item/664-housing-bubble-2
The problem with bubbles is that can keep on getting bigger before they finally burst. We expect the stock markets to continue to rise, the bubble may get further boost, and the risk keep on rising.
It is a dangerous situation for investors, the only way to make profit is to stay aware about global situation, especially inflation and housing sector.
Nifty Weekly View
Trend is up and Nifty may reach its all-time high this week.
EIC Framework – Economy > Industry > Company
It is a proven and classical framework to identify the best stocks. Investors should start with an analysis of economy, if that is positive, then narrow down the best sectors, and finally identify the best stocks in shortlisted sectors. This framework needs heavy research, but is always successful.
Shorter Term is Better
The longer you hold a stock, the higher the risk that something may go wrong. And it is especially true for derivatives, if you hold for few days, and the future moves by say 3% against your position, you may lose 30 to 50% of your funds, depending on margin requirements. Safest trading is intraday, it also helps you sleep stress-free.