Good That US Government Avoided A Shutdown

This post is a copy of my newsletter sent to my subscribers on 02-Oct-23. You can also receive such emails by signing up the form above.

It is good that the US government avoided a shutdown. If this had happened then for sure our Stock Markets would have gone down by at least 6-7%.

Why the fall?

Events like the US shutdown affect foreign flows by Foreign Institutional Investors (FIIs) and Foreign Portfolio Investments (FPIs) into the Indian market, which is an important factor for Indian stock markets.

This may have had a cascading effect. What is the cascading effect? A cascade effect is an inevitable and sometimes unforeseen chain of events due to an act affecting a system.

Of course, 99% of retail investors will not know why the markets are falling. Those 1% of retail investors are either High Net Worth Individuals (HNIs) or Portfolio Managers (PMS). They will know and will start selling equities or will not buy new equities in the falling markets.

If there were no cascading effects the markets would have fallen by a mere 3-4% – but due to cascading effects, it could have fallen by 5-6%.

However, the bill has been deferred by 45 days until the 17^th of November 2023.

Then what will happen no one knows.

What you can do?

If you are an investor – stay invested – do not sell your stocks in panic. They will rebound later.

If futures and options traders – just hedge. Do my course to learn hedging and keep your money safe.

Side note: India VIX increased to 12.86 on 28-Sep-23 due to this news only. But when the news was out that the US government shutdown would not happen now – it fell by 10.68%

Nifty VIX 29-Sep-23

That’s it. Keep your investments and trading simple and you will generate a good income. Trying to do anything extraordinary will take money out of your Demat account.

Trade safe.