Sunday, September 14, 2014

October 19th is the Date to watch

The markets continued to meander while the mid-caps kept up with their upward trajectory. The Election Commission has announced the dates for elections for Maharashtra and Haryana and also the dates for the counting of votes.

1. 15th October is the date when Maharashtra and Haryana goto polls and October 19th is the date when the Results will be out. with J&K polls likely to be postponed to ext year due to the floods, these become key elections.

2. Maharashtra has been under the rule of NCP - Congress for the past 15 years. with the political capital being lost in May, a setback for Congress here would strengthen the hands of BJP. At the same time if NCP Congress pull it off, then there would be a fightback against Modi Government and policies.

3. The FIIs continue to be buyers. Also, Disinvestment is planned in a big way in September October which could mute the rise of the markets.

4. The Markets should peak out between 8200-8500 sometime in the months of October and November.there could be a correction of 10-15 % from the top which would be a buying opportunity.

5. Many mid caps, at least the ones which I hold have doubled or tripled from the cost price. Such stocks it could time to book profits hold on to remainder and enjoy the dividends.

6. We could see some dip to 7900-8000 followed by a rise up towards Diwali. what is significant is the broader markets continue to move up.

7. Diesel prices may actually be cut this month followed by further reduction in Petrol prices. All this bodes well for car sales.August car sales rose on the back of Ganapati festival demand, whereas September and October would be driven by Diwali and Dassera.

Now would not be the time to add fresh stock positions but wait patiently to book profits and await for some correction to jump in.

Sunday, September 7, 2014

Upmove continues; FII flows continue

The markets gained another 1.7 pc. The markets continue to make a steady upmove with minor corrections on the way. Let us see if  this week has brought any development in the current move.

1. The GDP numbers and auto car sales which were excellent aided the up move to new all time highs. markets are all about sentiments and sentiments continue to improve.

2. FII were huge buyers in the first week of September almost buying 5000 crores worth of shares. As long they continue buying, corrections would be short lived.

3. Another key development during the week was that under recovery on Diesel has come down to 8 paisa or almost disappeared. This means the Government burden of subsidies on Diesel and Petrol stand removed. This will help in meeting the fiscal deficit targets.

4. The next week surely will have the announcement of the election schedules in key States. Maharashtra is economically very important as the funding comes from Maharashtra.

5. Technically, the markets look to hit 8200-8400 before any significant correction. Another key feature of this rally is that the mid caps are now flying. As mentioned, its all about sentiment and I would not be surprised if we hit all time highs around Diwali before forming a short term top.

6. What does an Investor do now? Invest in quality Stocks which are not overpriced. else one may again get stuck with overpriced penny stocks as in every bull run.

Overall, its time to consolidate and look at part booking of profits., Finally money earned is not notional profits but the money taken home.

Sunday, August 31, 2014

Incremental Gains Continue

The truncated week saw another 0.5 % gains despite of it being expiry week. The markets continue to make steady progress. Let us examine the parameters which will influence the markets.

1. FIIs continued to be net buyer everyday of last week. They have bought cumulative 7000 crores for the month of August alone.

2. The GDP numbers which came in on Friday at 5.7 % were way beyond expectations. I expect good car sale numbers keeping in mind Ganesh Chaturthi sales.

3. Modi visit to Japan and the warmth displayed by the Japanese Prime Minister bode well for the country. Japan is Asia's second largest economy and we are the Third largest. Japan invests significant amounts as aid for development. Japan is a key Strategic economic as well as Defence ally for India.

4. India is surrounded by China and Pakistan. It needs allies who need similar support and have similar concerns. Japan, Philippines, Vietnam all become natural allies. Any conflict is always decided by the Friends a country has.

5. The Election Commission is yet to announce date for elections so expect limited action till then.

6. Technically, Nifty is very bullish considering it is closig at all time closing highs.

Unless something major negative happens, I expect small upwards movements to continue. The ext major trigger will be the Assembly Elections in the 4 key States in October and November 2014.

Sunday, August 24, 2014

Markets continue to Consolidate

The markets continued to consolidate up 1.6 pc. The markets moved up 2.5 pc for the month so far and the movement has been so quiet that no one has noticed. Let us see if anything has changed this week.

1. The FIIs continued to be net buyers for the entire week. This indicates that the flow of foreign money continues.

2. The markets closed at new monthly highs and much over the previous high of 7840 which is a very bullish sign.

3. The monsoons have stabilized and spread across the country. The poor monsoons, even though the deficit is still 19 pc seems to be receding in the past.

4. The markets have moved up but the individual stocks are still lagging behind. This could be a buying opportunity for selective stocks.

5. There seem to be no clouds on the horizons but a potential trigger could be the Assembly elections results in the 4 states Maharashtra, Jharkhand, J&K and Haryana. The results could be around the last week of November and that is the time when the markets take a decisive turn up or down.

So, now is the time to enjoy the festive seasons, buy good quality stocks on decline. 6400 is the long term support and 7450 is the immediate support.

Sunday, August 17, 2014

Weekly Gains by the Market but....

The Markets gained 2.9 pc in the last week based on hope in the budget speech. There are some disconcerting signs in the market.

1. The markets are only 50 points away from the previous all time high but many of the mid caps are 20-30 pc down from the top. This is a disconcerting sign.

2. The FIIs continue to be net buyer albeit at a smaller rate. The DIIs have out bought the FIIs by 3:1 ratio.

3. Modi speech was the correct one but unfortunately not enough to enthuse those who are looking for a quick gain from the markets. At least 1 should have the patience to hold for the next 18 months.

4. There are have been critical turn dates sometime in July and middle of November, so depending on how the markets react we can get a 10-15 pc correction from the top.

5. The structure is in place for the next Bull Run, but the Government will go slow, first wait for the Assembly Elections in Maharashtra, Haryana and Jharkhand out of the way. The dates are supposed to be announced on August 20th and the model code of conduct will be in place anytime soon.

6. From the strategic long term point of view it makes sense to focus on Assembly elections, increase the tally in Rajya Sabha and then go for the big bang reforms.

Strategy remains the same, buy on dips good quality stocks which withstand the test of time and ot look at that them everyday or even every week. Businesses do not change everyday.

Sunday, August 10, 2014

Correction: A Buying Opportunity

The markets continued the correction from the top. Week on week, the markets corrected 0.4 pc to close at 7569. The Long Term trend remains intact and this should be treated as a buying opportunity.

1. In every Bull market, corrections are normal and a correction of 10-15 pc from the top should be treated as normal and welcome.

2. The FIIs have sold about 1000 crores in August and the DIIs have bought above 1600 crores. Such phases are usually buying opportunities.

3. The monsoons have stabilized, the deviation from the Long Term Average has come down to -17 pc.

4. The markets have been driven down mostly on geopolitical tensions. As seen in last August, these are transient in nature. The bounce is sharp and does not give too much of a buying opportunity.

5. The Auto Sales have been robust now for the month of July. Auto Sales are early indicators of heightened economy activity and a change in sentiment.

6. The Economic cycles are always based on sentiment. The minute people start feeling confident and good about themselves, they start going out and buying. Buying leads to orders being placed and the cycle goes on. The trigger for the chage in sentiment was the election of the Modi Government.

7. Key elections in states of Maharashtra, Haryana, J&K are the next trigger. while the BJP is expected to do well in Maharashtra and Haryana, the proof of the pudding is in the results. An opinion poll gave the BJP-Shiv Sena combo a 2/3rd majority in Maharashtra. The results are key so that the BJP boosts its numbers in the Rajya Sabha and is not that dependent on regional parties to pass key bills.

The coming days and weeks will give good buying opportunities and one should stick to good highly robust stocks with strong and managements with integrity.

Sunday, August 3, 2014

Feedback Time - Good, Bad and the Ugly

I have been posting for 5 years and 3 months. It has been a long a journey and the road has been long winding and highly enjoyable.

I have been in the markets for 16 years now, helped run an investing Sunday club where we used to meet on last Sundays of the month for 5 years, and been part of various online forums for 11 years now.

To quote Robert Frost:

Two roads diverged in a wood, and I—
I took the one less traveled by,
And that has made all the difference.”

“These woods are lovely, dark and deep,
But I have promises to keep,
And miles to go before I sleep,
And miles to go before I sleep.” 

The journey has been highly exciting and helped me become a better Technical and Fundamental Analyst. It is time to take a pause and take a deep breath before commencing the next leg of the journey.

I need from each of you what has been Good, Bad and Ugly so that I can return as a better analyst.

It is time to step back and look at the Big Picture.

Please feel free to send your feedback at nish.stockid@gmail.com

Tuesday, July 29, 2014

Nifty Long Term Elliot Wave Counts

Today on a holiday, let us step back and look at the Long Term Elliot Wave picture. In the day to day and weekly hustle bustle, the big picture is often lost and it is only the big picture which counts and nothing else.

I tried to count the wave structure from the bottom made in October 2008 and re-tested in March 2009.

This post is dedicated to Ralph Elliot, the father of Elliot Waves (Born 28th July 1871)
http://en.wikipedia.org/wiki/Ralph_Nelson_Elliott

 



Wave 1 was from 2253 to 6338 constituting 4085 points and lasting from October 2008 to November 2010. It tested the previous top at 6358.

Wave 2 was down from 6338 to 4531 constituting 1807 points, about 44 pc of the previous rise. It lasted from November 2010 to December 2011.

Wave 3 started in December 2011 at 4531
Wave 3.1 UP 4531 - 6229 in May 2013 (1698 points)
Wave 3.2 DOWN 6229- 5118 in August 2013 (711 points - 42 pc retracement)
Wave 3.3.1 UP 5118 - 6415 in December 2013 (1297 points)
Wave 3.3.2 DOWN 6415 - 5933 in February 2014 (482 points - 37 pc retracement)
Wave 3.3.3 commenced in February 2014 and has targets of 7631, 8680 or 10378

Wave 3 has traversed about  1908 points from 5933. depending on where it ends, the broader targets for Nifty could be around 10400-12000 points.

Overall, the top should be made sometime around November 2015 - Feb 2016 period as per the famous 8 year cycle, where every 8 years a serious top is made.

The negation point for all this break of 6350, the previous multi year top.

Strategy for me is simple:
I have just bought and held the 10 stocks I shared with my friends as my core portfolio on June 30th.
I will take a call on liquidating them in November 2015, in the intermediate book profits and keep reducing cost of acquisition.

Elliot is not the holy grail of investing and should be used just as 1 of the aids for looking at the big picture.

Sunday, July 27, 2014

Expiry week looms large

The markets gained 1.7 pc during the week to close at 7791. Next week is expiry and a truncated trading week to boot with a holiday on Tuesday.

1. The FII buying continues but with a slightly reduced buying intensity.

2. The monsoon has well and truly set in over the country and it may just be a case of delayed monsoon cycle where the entire cycle is pushed forward by 1 month.

3. The markets for this week have expiry and only 3 days to expiry. The markets would be bullishness above7841 and a range of +- 200 points can be expected over this week.

4. The fundamentals seem to be improving with sentiment sky rocketing.

5. Only warning sign for the BJP is the Uttarakhand by election results where the Congress swept all 3 seats including 1 seat held by the BJP for 20 years. This brings them closer to 35 seats and the Congress Government in Uttarakhand becomes safer. The longer term implications are that the BJP needs to be careful especially with elections in key states like J&K, Haryana, Maharashtra looming large in next 3 months.

6. Winning in these key States is essential so that the Rajya Sabha strength of the BJP increases.

How Modi handles the next 4 months will define his first term in office. Interesting times ahead.

Stay tuned for a special update on Nifty Long term Elliot Wave Charts on Tuesday morning.

Sunday, July 20, 2014

Cues Turn Positive

The markets have digested the budget and had a rally of 2.7 pc. The Q1 results are in the process of being declared.Let us look at the key factors influencing the markets.

1. The monsoon worries have abated and it is raining in most part of the country. The deficit has gone down to -15 pc from -43 pc. We may have a deficient monsoon but definitely not a severe drought as feared.

2. The FIIs were net buyers to a tune of 2000 crores last week thus being the major drivers for the markets.

3. The IIP numbers have improved. There is a change in sentiment in the markets. The mood of the people is upbeat. Often, it is the change in sentiment which drives economic activity. If people feel optimistic about the future then they spend money and consumption drives growth. It is a cycle and we may just have hit the bottom in terms of sentiment in early 2014 and moving up.

4. Auto sales for the month of June were good. These are early indicators of economic activity picking up and trends for the next few months needs to be monitored.

5. Globally, the Iraqi situation has stabilized and Brent crude prices are down. The Government is losing just Rs 2.5 over diesel and if this trend continues by the end of the year, the subsidy on Diesel should end. Diesel and Petrol being subsidy free, who would have thought about 4 years ago, when Petrol was made free from the subsidy regime in June 2010.

6. The Nifty is at a critical level between 7650-700 and a close above these levels would indicate further upsides.

7. Projected targets could be range from 8100 to 8400 levels.

8. The Results of companies have been fairly good. Reliance beat expectations yesterday and so did TCS.

Time to stay invested and reap the benefits of long term investing.