By Nigam Arora
India remains the best long term opportunity outside the U.S.
Buying Gold
We wrote in the Morning Capsule:
India bought 39 tonnes of gold and reduced U.S. Treasury holdings from $242B to $227B.
As we previously shared with you, foreign central banks are rebalancing their holdings and deprioritizing U.S. Treasuries.
Cutting Taxes
India is changing its tax structure to cut taxes on consumer goods in an effort to increase local consumption.
The previous structure for consumption tax had four tiers: 5%, 12%, 18%, and 28%. The revised structure has only two tiers: 5% and 18%. Select specialty items like cigarettes and high end cars will be taxed at 40%.
The tax cuts will go into effect on September 22, the first day of a major festival.
Countering Tariffs
India buying more gold, reducing U.S. Treasuries, and changing the tax structure are designed to counter the negative impact of U.S. tariffs on Indian goods.
Zones
For those following the Good Way, the Buy Now rating is *** (To see the locked content, please take a 30 day free trial).
For those following the Best Way, the buy zone is $*** – $***.
The allocation is ***% – ***% in the Core Model Portfolio and ***% – ***% in the Lower Exposure Model Portfolio.
Those who are starting a new position may consider a lower allocation at this time – ***% – ***% in the Core Model Portfolio and ***% – ***% in the Lower Exposure Model Portfolio.
The Plan
If stocks in India go lower, the tentative plan, barring any new data, is to continue buying EPI and accumulate more over a period of time. This is why it is important for those starting a new position to keep the quantity small at this time.
What To Do Now
Those in EPI may consider continuing to hold.
Those not in EPI may consider following the parameters given above.
Note: Signal(s) to enter, add, reduce, exit, hold or change.
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Nigam Arora
Nigam Arora is known for his accurate stock market calls. Nigam is a distinguished master of the macro. He is a popular columnist with over 100 million page views, an engineer, and nuclear physicist by background. Nigam has founded two Inc. 500 fastest growing companies and has been involved in over 50 entrepreneurial ventures. He is the developer of Theory ZYX of Successful Change Management and is the author of the book on Theory ZYX, as well as the developer of the ZYX Change Method for Investing.
