The WeekendInvesting Newsletter - 6 Feb 2024

In this article, I wanted to touch upon the recent decline in Chinese small-cap stocks and its potential connection to Donald Trump’s presidential campaign in the United States.

Over the past few weeks, the small-cap index in China has experienced a significant drop, plummeting from nearly 6500 to 4500. Yesterday alone, the fall exceeded 7%.

While this could be attributed to various factors, including market dynamics and economic conditions, some speculate that Trump’s observations and rhetoric about imposing a 60% tariff on Chinese goods imports may be influencing this downward trend. . . . .

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Investing in mutual funds has long been a popular choice for individuals looking to diversify their portfolios and maximise returns. However, recent observations by Zafar Sheikh (from Invesys Capital), shed light on an interesting trend.

Since the bull market took off in March 2023, the Small Cap 100 Index has surged by a remarkable 87%. In comparison, the top mutual fund in the same category only managed to gain 82%, and the category average stood at a mere 59.9%. Similarly, the Mid Cap 100 Index saw a growth of 66%, with the top mutual fund and category average clocking in at 68% and 53% respectively.

These numbers beg the question: why are the average mutual fund investors falling short of the performance of the indices they’re tracking?

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WeekendInvesting Daily Bytes

The markets opened on a positive note on 6th February 2024, with Nifty holding on to the support area of 21,800 and showing a strong performance, gaining 0.72%. This is a positive sign for the markets. 

Nifty has been lacking direction for some time now, after a strong rally from October 2023 to mid-January 2024, , especially after a period of choppy movement in 2024. However, the next few sessions may provide more clarity and direction for Nifty. It is crucial to assess how Nifty will proceed and what kind of direction it may take in the future.

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