Market Guru in talk with RJ Salil Acharya of Radio City: People with a long-term view can buy Gold when it trades in the range of Rs 45,000-46,000
Anil Singhvi, Managing Editor, Zee Business, says, August 2021 has been the best ever August for the stock market till date as he has never seen such a buzz in the market in August till date.
Anil Singhvi, Managing Editor, Zee Business, says, August 2021 has been the best ever August for the stock market till date as he has never seen such a buzz in the market in August till date. During a candid radio podcast, “Kadak Currency’, with RJ Salil Acharya, Radio City, 91.1 FM, Mumbai, Mr Singhvi said gold prices will stay in the range between Rs 43,000-50,000 and people with long term perspective can buy the yellow metal when it trades in the range of Rs 45,000-46,000.
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RJ Salil started the podcast, ‘Kadak Currency’ fluctuations continue to happen in the market, but a type of steroid injection has been applied to the market for the last 10 days. What is the reason behind it and has all the levels have been broken? Mr Singhvi in his reply said, it seems so. It is so that this August has been the best in history so far. This kind of bullishness has never been seen in August and with this, you can get an idea of how excited the market is as Nifty has crossed the mark of 17,000 while Sensex is crossed the 58,000 level. So, it is unstoppable, and strength is being created from all sides, global markets are strong, FIIs are buying, markets are quite strong and corporate results were good. So overall mood and atmosphere are good, and the market is running based on the same.
In his next question of the podcast, RJ Salil said there is always a discussion of GDP growth, it is not only this time, but every time also it has been there. So, does GDP growth numbers or these data directly makes the market run up and down? To which Mr Singhvi said, the market has matured a lot due to which instead of fluctuating just on the numbers it fluctuates on the direction and the direction of the GDP growth was towards up, this time, the figures of GDP growth is above 20% and it was expected that the numbers will be strong. Although the market is moving up and it would have gone up even if the GDP numbers would be a bit lower because everyone knows the direction that economy is strengthening, ours as well as America and growth are returning in the economies of all the countries across the world. So, I think, in long-term GDP figure is very important but will not matter a lot in the short-term.
To which RJ Salil asked, many people are sad as they missed the opportunity. There are ups and downs in the market, so, can we now expect that we will get a second chance to buy? Mr Singhvi in his reply said, it is so that if I will ask you to keep walking straight on the road, you will not enjoy it and you will feel that I am getting you to work. But, if I will tell you, let me take you to a theme park and get you a roller coaster ride then you will enjoy it. Is it so? RJ Salil, of course. Adding to his statement, Mr Singhvi said, the same is the situation of the market. If it goes straight then what is the fun, so, it should move up and down which creates fun and that is how it always keeps you busy. So, in the next 10-15 days, whenever the market gives you a chance and weakens, consider buying, you will get it a little down, don’t be in hurry, don't rush. Whenever you get a chance, grab it and wait for it.
Continuing the podcast, Kadak Currency, further, RJ Salil said, we have a lot of discussions on increasing prices of petrol and diesel. Currently, the prices of LPG and CNG are also increasing. Why does it not have any direct impact? Secondly, if they keep increasing continuously then should we take only those stocks like oil companies as we can see that they are going? Mr Singhvi said, it is correct. Many times, I have said that whatever is out of your control for example if you are moving out for dining to a hotel and you are aware that it is too costly, so, if that hotel company is listed then buy its share. It is the best way. Similarly, if you feel that you are paying more for anything and they are charging more than enough, it means the company is earning a lot and if it is earning then buying its shares is wisdom. It is just a matter of common sense, but you have to make up your mind. Overall, it is true the way the inflation is increasing may be due to the prices of petrol and diesel or due to the price increase in gas among others. It doesn’t have a direct impact; it has an indirect impact in which inflation increases gradually. When inflation rises, the economy gets a little tough, the interest rates turn a bit hard, and it makes a difference in the long term. But in the short term, if the prices of the products of the company are going up but its cost is not increasing, i.e., if the cost of gas extraction and its distribution is the same but the selling price is increasing then the company will be benefitted.
In his next question, RJ Salil mentioned an article saying people are out of pocket but if you have a look at the stock markets, it doesn’t seem like it. At the same time, the gold loan is at a high of a huge level and have increased by more than 70% in the last six months, maybe people would have thought that the pandemic will be there for a small period of time and gold is a product that can be bought when you will have money in your pocket. So, is this gold loan good for the short term as its interest rates are quite high? To which Mr Singhvi said, the gold loan has increased due to two reasons (i) during the COVID and post-COVID, everyone is not that fortunate like us that they have jobs or have earnings or are making money at an ease and there is no problem. But many unfortunate people have lost their jobs, or their businesses went in losses and were left only with an option of borrowing money from one or the other place. So, the better option is that you are taking a loan against gold.
The second reason is taking a loan against gold is an easy task and you will get it at ease in which you go and provide your gold, which is verified by them after which you will get the loan to a value of that which lies in the range of 70-80% of its value. Secondly, if you will opt for a personal loan then its interest rates are too high while the interest rates for gold loan is quite low. In fact, you will not believe that many public sector banks are offering gold loan at 8% interest rate, while in the case of the personal loans may have to pay interest rate up to 15-18%, whatever they want. The financing companies of the gold loans were financing at 13-14% but if the public bank comes and are aggressively providing gold loan at 7-8% then it is true that we will go there to take the loan. So, the main reason for the increase in the gold loan is that it is available at an ease, earlier, there were few NBFCs, but now public banks are also doing it and have reduced the interest rates.
RJ Salil in his next question asked Mr Singhvi’s future horizon in gold and silver as Diwali is coming close, so can people make investments in these metals? Mr Singhvi said, it will neither increase of decrease till Diwali and December. There is no bullishness or slowdown. There is no bullishness because, if the global economy will recover then it will not increase, generally, gold prices go up during bad times, it is such a case that if nothing is going right then people feel buying gold is safe. So, when all the economies like the US and ours among others are in a mood to recover than gold prices will not go up a lot. At the same time, it will not even decline because every person would like to have some amount of gold in their portfolio for the bad times. So, I feel that the gold will neither go below Rs 43,000 nor will cross the mark of Rs 50,000. It will spend its time in this range of 5,000, so, it will not have a major impact. So, if you want to have it from the long-term perspective then buy it when it comes in the range of Rs 45,000-46,000.
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