Greece has kept all financials market on edge, Last Monday 29 June 2015 Financial market around the world got a shock when Alex Tsipras declared he will hold a referendum asking voters they will reject bail out condition given by creditors, market round the world fell down but Indian Market showed tremendous resilience and bounced back sharply from the low of 8200 and closed the week at the highest point. This was also the week when Greece Becomes First Developed Country To Default To The IMF
Market round the world opened with big cuts but again like last Monday Indian Markets are showing great resilience and have recouped most the loss.
So lets me discussion the reason for this kind of resilience and road ahead for Indian market.
FII’s hot money was chasing China market as its was outerpforming on a big way was up more than 52% in last 6 months. But as the saying goes “Chinese Goods cannot be trusted” , Chinese market are down 25% from top in just 3 weeks,Investors Lose $767bn in China Stock Market Crash Funds manager round the world are changing allocation and money can flow to more stable market like India, which does not have volatility of 10% Intraday swing and fundamentals are improving every passing day.
Fall in crude oil prices & dollar strength
One indirect benefit of Greece vote is fall in crude oil prices, and second, as the dollar has strengthened, the possibility of US delaying its interest rate hike is increasing. Both these things are beneficial to India.
The delay in US Fed rate hikes will allow FIIs to remain invested in Indian markets and the crude fall is definitely beneficial to Indian economy, so both these are indirect benefits to Indian economy.
- No impact on Indian economy
Contribution of Greece has shrunk in EU, the institutional impact (both internally for Greece and outside) would be significantly less this time around.
India has very little direct or indirect exposure to Greece. Even for some of the sectors which have exposure to EU, the importance of Greece is minimal.
Indian market has corrected sharply from High of 9100 seen in March 4 to 7940 in June based on High Valuation and excessive Optimism, so valuation has comes to more realistic level based on forward earning suggesting Long term buryers are stepping in on Dips to buy stocks whose valuation has comes down to realistic level. We will have a result season again from 9th onwards this month. Everyone has discounted pessimism of the result season
As discussed in Weekly Analysis technical of Nifty are looking strong also time cycle till 25 Sep is very positive so dips can be used to buy with proper risk management and risk appetite.