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First came the shock of Modi. Next came the shock of Trump. Consequence – BSE Sensex crashed by 1689 points. A part of this was expected because the world was expecting Hillary. My guess was always Trump and I know for sure that the Sensex is going to take a beating because of both Modi and Trump. But this much? I was ready for a crash going by the lessons learnt during Brexit but this time, there was much to learn. The final outcome was, Sensex crashed by 1689 points but recovered 1300, meaning, for one who invested at -1650, it’s a tremendous shoot up of 1300 points on a single day. It’s a no brainer generally and even here, had you selected your sector correctly, you will mint money.
Though Trump Effect was more pronounced, it’s Modi Effect which was more long lasting. Trump effect was, the complete world share markets crashed but recovered to some extent after accepting the reality that Trump won. Modi effect is different. Wherever there is black money, there is going to be a permanent bruise. I thought the impact to share market will be only to shell companies which are used as fronts to manage black money. I pumped in money(well, whatever I got)
Only today, when Mahindra and Mahindra didn’t pick up as I expected, I was able to realize what went wrong and what was the mistake I did – I haven’t considered the sectors where there is black money.
The main areas where Indians pump in black money are
1. Real Estate – The index crashed by -16.5%
2. Gold – TBZ fell by almost 15%
3. Automobile – M&M and Eicher Motors are yet to recover yesterday’s losses.
4. Bollywood
It’s not that these entities hoard black money, but the thing is that people use unaccounted cash to buy products from these sectors. There can be some other sectors which may have been impacted. Sifting these from Trump phobia would give anyone excellent returns.
Now, today. People started surrendering their currency to banks. It’s mostly government banks and less of private ones because private ones deal with privileged customers who generally operate in cash as an exception, not a norm. Since a projected amount of 15 lakh crore is expected to be injected into the bank systems, their share prices are going to shoot up – more money in bank, less NPA%, more liquid money to circulate and give loans etc. This is exactly what happened – Bankex rose by 3.63% while PSU bankex shot up by almost 9%.
The bottom line is that, either be proactive or be a monday morning quarterback. If you are proactive, use the early bird opportunity well. If you are a quarterback, wait for the next time, which may never come.

via Blogger http://chaoticindian.blogspot.com/2016/11/monday-morning-quarterback-lessons-from.html

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