Sunday, June 18, 2017

GST and Progress of Monsoons to be watched

June has so far been a boring month for the markets. The indices have moved in a very tight range. Mid caps have corrected quite a lot. The next triggers for the markets are the Monsoon progress and the GST implementation.

1. The progress of the Monsoons by the end of the month will be closely watched for its impact on the markets. The positives have all been factored in.

2. The date for GST rollout has been set for July 1st and anything more than teething troubles will be taken negatively by the markets.

3. Globally, the rate hike by the Fed has taken the rates to 1.25 %. What no one realizes is that higher the rates go in the US, lesser is the cushion for a rate cut in India.

4. Globally, there do not seem to be any major negative triggers and that is 1 reason the markets are in a somnolent range.

5. The markets have risen from 7893 to 9700 levels without any major correction. The maximum the markets have corrected is 200 points. A correction of 500-600 points will come at some point of time.

6. Trump seems to have settled down in the US. So, negative triggers reduce from the US. He always will be the unpredictable wild card.

Strategy remains to buy on dips with periodic profit booking.

Sunday, June 4, 2017

Mid caps the focus now

The Nifty continues to go up slowly but steadily. The real story is in the midcaps where there are bigger swings. Many corrected about 20 pc or more when the index corrected barely about 2 - 3 pc.

1. The mid caps which one can look are the mid caps which will become the large caps tomorrow. The real cream is in these stocks.

2. To quote an example. a food retailer which had listed in March corrected about 20 pc from the top before resuming its upward journey.

3. The sectors which will do well now are Capital goods, consumption driven themes, housing finance companies. private banks.

4. The markets may correct in June. In all this talk of rally, there is a good 400-500 point correction pending. So far all corrections are limited to 200 points.

5. The GST rollout in July 1st will be the next big thing. It should go through smoothly with niggling teething troubles.

6. Mid caps which are high growth, low debt should be the focus areas.

7. Pharma stocks represent a long term buying opportunity. Every dip is a buy.

When Nifty corrects. the mid cap correction will be magnified and that is the time to buy.

Sunday, May 21, 2017

Long overdue correction happening

The markets for due for a correction and that is what we are seeing now. Trump effect does it act as a trigger for a more pronounced correction or it something for the very short term.

1. The maximum correction so far has been 200 points. This takes us to 9330. If it is a wave correcting the entire up move then it will last much longer and one can expect the election gap of 8940 to be tested.

2. Domestically, there are no major triggers in the coming months.

3. This is a bull market no mistake about it and every correction is a buying opportunity.

4. The Pharma and the IT stocks are in a prolonged bear market and they will take some time to recover.

5. The eventual targets for this markets on the Nifty are between 10500 and 12000/

6. The markets will follow the US market moves which will follow the antics of Donald trump It is not that easy to impeach a US President.

7. The GST rates announced are fair and reasonable.

8. Gold prices can spike up on every Trump crisis that erupts.

Every dip is a buying opportunity and the smooth rollout of GST will be watched. The onset of Monsoons will be an important trigger for the markets.

Monday, May 1, 2017

Markets to consolidate

The results has mostly ended and the good results are in. A few results surprised on the upside and the results were mostly good.
 1. There are no major triggers for the markets to either sharply go up or down. That is why we are seeing the markets oscillate in a range.
2. The downside risks globally are only a risk of war. US companies reported record earnings.
3. There are several good IPOs lined up and can be considered for investment.  They offer a safe investment.
4. The markets should remain strong for next 18 mobths at least and a range of 10500 to 11500 can be achieved.
5. Every dip is a buying opportunity.
6. The election gap may not be filled and the corre tion can be to maximum 8950 levels.
 7. Part booking of profits and re investing the same is a must to lower cost price of holding, protect profits and safe guard oneself from black swan like events.
8. Elliot suggests up side 9450 9500 and correction limited to 8950 9000. One can book profits at upper end of range and buy back at lower end of range.






 

Sunday, April 16, 2017

Correction about to end

The first 2 weeks of April have been listless and dull. Exactly how the results months play out flat and in a range. Despite the correction, there are many stocks hitting new 52 week highs. Let us see what next for the markets.

1. The pace of correction is gentle at best and that implies it is just a correction then anything more. 9119 the previous high will become a strong support for the markets.

2. The previous fall was from 9218 to 9019 approx 200 points. If we look at equality current fall should end at 9072 max.

3. Geo political tensions have increased in Syria and with North Korea but no one seems to be interested in aggravating tensions. Apart from token attacks, the things seem to quieten down without too many fireworks taking place.

4. International markets also are flat and listless.

5. I expect 1 last up move before a decent correction. The market is looking sluggish but one last up move, a burst of glory can be expected. 

6. Now, and in this up move is the time to book profits.

7. Sell in May is the old adage and this time it may prove true. Part booking of profits and buying the same stocks back at ower levels thereby reducing the cost acquisition is recommended.

Sunday, April 2, 2017

Small consolidation before new highs

The markets were propped up this week and let us look at what the new financial year brings to the table. This has been a very good year for the markets.

1. The markets needs to convincingly break 9218 and close above it for 9400-9500 levels. It could happen that we spend  more week consolidating in the 9000-9200 band before breaking out for new all time highs.

2. The Global markets are benign at the moment and no major triggers are expected at the moment.

3. Domestically the new triggers wll be the earnings season which will kick off in middle of April. The next 2 weeks the markets have no major trigger and one can expect side ways movement.

4 The gap needs to be filled up. If it does not get filled up now it may never get filled up. Rember the 2009 election gap at 3700-3900.

5. The movement is very stock specific and it is time to add good stocks which will give solid returns over the next 18 months.

The Bear phase is behind us now and now is the time to buy all dips. With good stocks one will definitely make loads of money.

The IPOs are also coming in the markets and one could play the lottery by applying for 1 lot in the name of everyone in the family. A cool 3-4 K can be made minimum from each allotment that one gets.

In a nutshell, very unlikely that the markets will correct much below 8950.

Sunday, March 26, 2017

March year end considerations

The week gone by was pretty much flat and I expect the current week to trend with a positive bias.

1. March 31st is the year end NAV time. Many of the fund managers have their bonus based on this. This month the DIIs have been sellers and I epect them to turn buyers the next week.

2. The post election results gap still has not been filled till 8935. Many times such gaps remain unfilled. This gap can remain unfilled if we have a final blow out rally till 9400 or 9500 and then a 400 500 point correction.

3. This market seems to have entered into a bull run and I do not expect any correction beyond 400-500 points on the Nifty.

4. Financials, Autos and selective Pharma stocks remain my top pick.

5. Global cues are stable and I do not foresee any trigger from them and the next doemstic triggers are only after the 10th of april with the full year results.

6. The markets are usually range bound, or negative at the time the Results are declared and I expect the same this time around too.

All in all, we are in a bull run for now with all corrections to be bought into. Also, by booking profits periodically we keep ourselves safe.

Let us see f the NAV pumping comes true the next week.

Monday, March 13, 2017

New Highs followed by 400-500 point correction

UP Results are out and the BJP has got a resounding victory beyond what even the most optimistic exit poll could forecast. This would mean that the markets would rally in the near time and we would go to fresh all time highs.

1. The SGX Nifty is at 9100 and the markets would easily scale Mount 9200. Now, the counts are very clear. We are in a long term bull market.

2. The first wave began in 2001 and ended at 6353 in 2008.

 Second wave corrected this from 6353 to 2252.

The Third and the most powerful wave is in progress.

3.1 2252 to 9119
3.2 9119 to 6825
3.3.1 6825 to 8968
3.3.2 8968 to 7893
3.3.3.1 7893 and ongoing

Within this, 3.3.3.1will end in a few days between 9200 and 9300. Then we will have a correction of 400-600 point which would be a very good buying opportunity.

This also means that the next 2 years will be very good for the stock markets. Book profits in the highs of this week and buy the stocks back at every dip.
    

Sunday, February 26, 2017

Technically where do we stand?

The rally from 7893 has taken everyone by surprise and where does it go from here?








1. The rally has retraced the fall from 8968 to 7893 in faster time. This indicates it is an impulse wave started from 7893.

2. The rally has consumed 9 weeks so far.

3. If it is a fresh impulse some decent correction is due as a form of consolidation before the up move resumes. Lower levels are 8724, 8567, 8437.

4. I have plotted the rise as a 3 wave corrective up move but more likely it would play out as a 5 wave impulse up move.

The 1st wave was very clear 7893-8461, 2nd wave corrected till 8327, third to fifth wave is not very clear so I took the rise as an a-b-c rise.

Either which ways a correction to 8724 seems to be on the cards. There are negative divergences playing out.

A secondary possibility is this is A B C corrective up move and we may revisit 7800. Now all these are just numbers how does one invest based on them?

Buy 50 pc of intended quantity between 8500 and 8700. The broader market is showing signs of correction.

Sunday, February 19, 2017

Fundamentals - Where are we?

In the 6 months since September we have fallen about 1000 points on the Nifty and have risen back almost the same amount. Is the fall justified and also the rise?

Let us look at the reasons:

1. The Trump factor - The major reason for markets tanking was the Trump factor and it has played out so far. Jobs back to the US and closed door towards immigrants along with H1B visas is going to be negative for emerging markets.

2. Further rate hikes in the US. As Janet Yellen speaks of rates hikes sooner rather than later it means that the emerging markets become less attractive for FIIs. Jan was a negative month for FIIs and Feb is positive mainly due to mad buying in HDFC Bank.

3. The Politics factor - As the reports come in, it seems more and more unlikely that the BJP will win UP but it can emerge as a single largest party. The problem for the BJP is the untouchability factor. Like the Game Theory, BJP and the Samajwadi combo will never support each other. Mayawati knows to extract her pound of flesh and even with lesser number of seats will expect to be CM with outside support from BJP. Punjab seems to be a lost cause with Goa too close to call.

4. Rate Cuts - The RBI is clear it is done with rounds of rate cuts. So steroids for the economy cannot be expected from the RBI.

5. Demonitization - No one has seen the tangible benefits so far, they may come further down the line in terms of tax compliance. The loss to GDP needs to be factored in. GST also will lead to a spike in inflation.

On the plus side, we have a stable government in place, borders are stable and General elections far off.

The month of March is important for US rate hikes, reforms linked to UP elections and what meausres Trump rolls out. It has been a good 3-4 months for the markets those who bought in December, their portfolios have risen a good 20-30 pc. Time t be cautious.

I strongly feel we will get 1 buying opportunity in March to May period.