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Why Nifty is Falling Since 4-Jul-19 Easy Explanation


Since 4-Jul-19 both BSE (Bombay Stock Exchange) and NSE (National Stock Exchange) are falling.

Two main reasons are:

1. Business sectors such as Automobiles (Maruti Suzuki, Tata Motors), Banking (PNB, Yes Bank), Non-Banking Financial Companies (NBFC) (Indiabulls Housing Finance Ltd), and even FMCG (Parle) are seeing a heavy slowdown in business. More than 1 lakh people have lost their jobs in these sectors in just the last two months and more will lose in the coming days.

2. FPIs and FIIs are selling, in fact, the rich investors in India also not happy.

Read this article to know what exactly is the problem.

Most important read from the article:

If FPIs earn an income of over Rs 2 crore entirely from listed equities, they will now need to pay 25 per cent surcharge on their capital gains, short or long. In the case of income of Rs 5 crore and above, the same will go up to 37 per cent.

In case of gains from unlisted securities and derivatives trade, STCG for the Rs 2-5 crore group will be 39 per cent, while it will be as high as 42.74 per cent for the Rs 5 crore-plus group.

Almost half of their profits will go away in taxes. Then why should they invest in India?

95% of FPIs and FIIs fall in the above category. Just imagine their anger.

Now coming to when things will get normal?

Well, business sectors written above can see growth only if government give them loans on low interest to expand the business. Which I do not see happening in the near future.

FPIs and FIIs are awaiting clearance on the exact nature of taxes they have to pay. In India, the tax system is very complex. You need an expert to understand the exact meaning of the new tax rules. So this may take time.

They want to rollback – but I do not think this government will do this. This government is known to keep increasing taxes.

It’s unfortunate but we have no control over what the government does.

So I suggest trade with strict stop loss and if you are an investor invest in a few good companies as most stocks are at a very attractive price. However, you may have to wait long to make a reasonable profit.

This is the reason I keep advocating non-directional strategies which are the most popular strategies in my Nifty and Bank Nifty courses.

There is no money in trying to trade direction. This path is full of losses only.

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About the author: I started trading stock markets since 2007. However my first 3 years were losses. Then I dedicated almost 1 year on studying, researching, paper trading options and learned a lot in that time. Since 2011 I am trading Nifty options profitably. Call me if you need any help trading options on 9051143004.

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