I have been asked by many about a market direction on following 3 items and wanted to share the view/primary research work did on those items
Month-end Credit Settlement calls by broker firms – Yes. There will be margin calls and till early next week probably. However, those funds will once again BUY more once the next month starts
20th amendment issue – This is not an issue at all since the Government is very much stable with majority
Increased COVID19 positive count – The market already made swings to COVID19 impact Globally and Sri Lanka and many burnt fingers.
However, I strongly believe the situation is not a threat to CSE due to following
a) I spoke to IDH doctors and what they say is only 2 patients are critical, but all others are usual and fine.
b) If you look at the equation of all returned from middle east with COVID19 POSITIVE went back home safely after 14 days.
c) It is observed that Sri Lankans seems to have less threat due to BCG vaccine that all Sri Lankans get not like Europe or USA.
d)2,400 beds are almost filled but I spoke to SL army. It is a 24-hour job for SL army to make any incremental beds and it is not an issue to provide medical assistance in case of an emergency.
Hence, considering the above fact, I feel the Government is not planning to close the country. It is because the impact to the economy is not justifiable and the new development in countries like Japan, China, Bangladesh to live with COVID19 and ensure opportunities are exploited.
However, the ASI may dampened investor | day traders | swing traders’ interest for a very short period due to above which everyone might be greedy to take profits.
However, I strongly feel the market may come back stronger with following positive sentiments once everything above is realized by the investors together with following POSITVE NEWS which will come near short term.
a) Possible interest rate cut by the Regulators considering the second wave of COVID19 which has dampened the new projects.
b) Strong financial reports due to come into CSE of companies who are COVID19 friendly and exploited opportunities came through better than others.
c) New developments and positive policies of the New Budget for the year 2021.
d) The possibility of no impact or announcement of Living with COVID19 as the new normal. The Government recently issued a gazette to ensure health guidelines are met.
e) Increased WORKER REMITANCES after COVID19 drop in May-Jul recording YTD net positive growth which is a strong factor to stabilize the reserves of Sri Lanka
Therefore, what I suggest is to not to lose money which everyone incurred and experienced twice on 11th May and 06th October 2020.
If anyone selling on panic mode [specially the new investors whom are following social media],
SELL the SHARES OF COMPANIES WHICH CANNOT DELIVER SUPER NORMAL RETURNS IN UPCOMING QUARTERS and VISE VERSA FOR BUYERS
Disclaimer - This is not a BUY or SELL recommendation. Please research before making any decision.