August 2022, What Next After RBI Rate Hike: Trading or Investing (Part II)

  • Stock Market Analysis
  • Editors Pick

To everyone's surprise just a couple of months ago the headlines, topic of every blog or articles and discussion were about how long before the stock market makes a bottom, but now the experts are talking about the time it will take for the markets to reclaim their previous highs before recent correction (approx 16%)

We have seen July 2022 turned out to be an excellent month for global stock markets as well as Indian Markets.

The US benchmark gained an impressive 8.4% during the month. The Euro Stoxx 50 and the Nikkei 225 weren't far behind with gains of 7.3% and 5.3% respectively.

The Indian benchmark equity indices BSE Sensex and NSE Nifty also managed to register their highest return for July month in 23 years. The 30-share index Sensex climbed 8.58 per cent, or 4,551.31 points to 57,570.25 on July 29 from 53,018.94 on June 30, 2022. Likewise, the 50-share index NSE Nifty gained 8.73 per cent to 17,158.25 during the month. Prior to this, both of these indices posted their biggest July month gain of around 10 per cent in 1999.

As many as 26 stocks in the Nifty index managed to deliver over 10 per cent return to investors in July. With a rally of 37.65 per cent, Bajaj Finserv (NS: BJFS ) emerged as the top gainer in the Nifty index. Bajaj Finance (NS: BJFN ), IndusInd Bank (NS: INBK ), Tata Steel (NS: TISC ), Asian Paints (NS: ASPN ), Hindalco (NS: HALC ) and Titan Company (NS: TITN ) also gained over 20 per cent in July 2022.

Trades have also clocked handsome returns in July 2022 as the BSE Realty index climbed the most by 17.04 per cent in July. It was followed by BSE Metal (up 16.96 per cent), Capital Goods (up 14.19 per cent), Consumer Durables (up14.04 per cent) and FMCG (up 12.52 per cent).

In August 2022 traders will be anxious about the RBI policy (already announced) and also about whether the government can pass the Insolvency and Bankruptcy Code (Amendment) Bill to strengthen the Insolvency and Bankruptcy Code by introducing provisions on cross-border insolvency and certain other amendments for a time-bound resolution of stressed assets while maximizing their value.

Traders also believe that positive global cues and ease in selling by foreign institutional investors aided sentiment during the month. Sentiment buoyed further across the global markets after Fed states that it will slow the pace of rate increases at some point to assess the impact of higher rates on the economy and inflation.

In August 2022 investors will be looking forward for some of Corporate earnings like Bank of Baroda (NS: BOB ), MCX, Barbeque-Nation Hospitality (NS: BARQ ), Castrol India (NS: CAST ), ITC, UPL (NS: UPLL ), Zomato (NS: ZOMT ), Bosch (NS: BOSH ), Siemens (NS: SIEM ), Adani Power (NS: ADAN ), Godrej Consumer (NS: GOCP ) Products, Vodafone Idea (NS: VODA ), InterGlobe Aviation (NS: INGL ), Inox Leisure (NS: INOL ), Lupin (NS: LUPN ), Adani Enterprises (NS: ADEL ), Bharat Heavy Electricals Ltd. (NS: BHEL ), Britannia Industries (NS: BRIT ), Dabur India (NS: DABU ), Gail (India) (NS: GAIL ), Mahindra & Mahindra (NS: MAHM ), Muthoot Capital Services Ltd (NS: MUTH ), Nykaa (NS: FSNE ), Petronet LNG Ltd (NS: PLNG ), Titan Company Ltd (NS: TITN ) to gauge the investing status quo in August.

So now what next in August 2022

Should you buy more stocks now that the market is likely to go up again?
Should you wait for some time before taking an entry (after correction)?

- As a trader, you should try to analyze the companies with the help of Technical analysis. Therefore buying (or shorting) when the analysis is favourable and ignoring when it is not.
- As an Investor, you should try to figure out the fair value or the intrinsic value of the company. Therefore buying the stock if its price falls well below this value and selling (exit portfolio) when the price exceeds the fair value.

Nifty 17500-17600 zone will act as a major resistance zone in the coming days. And 17150 & 17000 as support zone for the market.

Please note:
For a trader, the concept of fair value or intrinsic value does not matter. All that matters is whether the prices will go up or down. However, as far as investing is concerned, the concept of fair value is of utmost importance.

Disclaimer: The above article is for self-educational purposes. Research conducted by the following students: J2k and Deepsy for learning purposes.

“Investing involves substantial risk. Neither the author nor the publisher, nor any of their respective affiliates makes any guarantee or other promise as to any result that may be obtained from using the research/report. While past performance may be analyzed in the research, past performance should not be considered indicative of future performance. No reader should make any investment decision without first consulting his or her own personal financial and/or investment advisor and conducting his or her research and due diligence, including carefully considering whether it is suitable for your particular circumstances, as this research/report does not take into account your particular investment objectives, financial situation or needs and is not intended as recommendation appropriate for you. In the event, any information, commentary, analysis, opinions, advice, and/or recommendations in the research/report prove to be inaccurate, incomplete, or unreliable or result in any investment or other losses, the author, the publisher, and their respective affiliates disclaim any and all liability to the maximum extent permitted by law.”

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