The Nifty has lost almost 9 per cent since Union Budget 2018, which saw some bluechip stocks falling as much as 50 per cent. If you are now expecting to get shares at a lower price in April, here's why you maybe disappointed.
Time period for long term capital gains ends
There was selling pressure in shares to beat the deadline of April 1, 2018, which has now concluded. Stock markets would now open on April 2, as today (March 29, Mahavir Jayanti) and March 30 (Good Friday, to commemorate the crucifixion and death of Jesus) are holidays.
Investors would have sold shares to avoind paying capital gains tax and would now use the same money to buy shares.
Mutual funds would be flush with funds from tax saving schemes
Mutual fund houses would also be flush with funds from schemes like ULIP and Equity Linked Saving Schemes. Investors would have invested money in these schemes ahead of the March 31, 2018 deadline for sec 80C benefits. Fund houses would now need to deploy this money.
Large amounts tend to get parked into mutual funds schemes like ULIPs and ELSS, ahead of the March 31, deadline.
There is also an incentive for mutual funds to invest, given that the benchmark indices have fallen a good 9 per cent from peak levels.
Calmer on the global front
Things seem to now be calmer on the global front. North Korean leader Kim Jong Un met Chinese President Xi Jinping during a four-day unofficial visit. There are reports that North Korea promises to denuclearize the Korean peninsula. This should be good news for the markets. Global markets too have fallen a great deal from peak levels.
The worries over global trade tariffs have been discounted by the markets. Stock prices are also extremely sensitive to rising crude prices. We believe that Brent crude prices may also have peaked at $70 a barrel and from these levels there could be some downside.
There is unlikely to be any more negatives that the markets have to factor, unless US President Donald Trump has something up his sleeves.
All in all, the month of April is likely to have a positive bias, more than anything else. So, the month of March was perhaps the right time to buy. Having said that markets are always unpredictable, though it would be a surprise if there is a sudden market slump.