Sunday, April 26, 2015

Time to buy Quality Stocks

It was another down week for the markets and the markets were down by 3.5 %. The markets have come down to attractive levels and it is time to buy.

1. The FIIs have been net sellers entire month and though they show a buy  figure of 16000 crores for the month, the entire thing comes on 21st April when the Sun Pharma stock was sold by Daichi.

2. Even though the markets have corrected by about 10 pc, most of the blue chip stocks have gone down by 20-25 pc.

3. If we consider this as a 3 legged down move then,

A was 9119 - 8269 = 850
B was 8269 - 8845 = 576
C is 8845 - 8273 and ongoing = 572

targets could be 7945 or 7745.

In either case, the time to buy has come. One cannot time the markets to catch the exact top or exact bottom.

4. The Global things seem to be stable. Greece issues come and go periodically.

5. Crude has stabilized around 60-65 USD. Any further spike would put pressure on the markets.

The current fall again highlights the importance of timely profit booking. Stocks which could have been sold in early March are now available at 25 % discount.

Sunday, April 19, 2015

Markets trapped in a range

The markets had a down week in the truncated week to again close at the lows of the week. The corporate results have started trickling in and they are pretty lukewarm to say the least.

1. RIL beat expectations and had their all time high record profits. The Retail arm posted profit for the full year. The real story in RIL woud be over the next 5 years when they de merge the Retail and Telecom business again as they had done in 2005.

2. TCS gave a big bonus to its staff on the 10th year anniversary of its listing. Ths also points out to increased attrition being faced by TCS and its move to retain staff.

3. The markets are trapped in a range between 8300-8800. Till the range is broken decisively we will not see moves either to 7800 or to new highs are 9300-9400.

4. The VRL IPO was oversubscribed and it is going to be a lottery for Retail investors those who get allotment.

5. The future move of the market will be guided by the Results season.

6. Probable path for the Nifty could be 1 more up move from here to about 8800-8900 before a dip to 8000 or a straight dip from here.

7. In the last couple of days, the FIIs have begun selling.

The bottomline is clear. The next 18 months at least are very bullish for the markets. It is a buy on dips market.

Sunday, April 12, 2015

Mid caps start outperforming

The markets have gone up another 2.3 pc and we are at a critical juncture now. Let us see if fresh highs are in the vicinity or 1 more correction is due.

1. The week had postive overtones for the Government with the overwhelming success of the REC OFS. The only grouse I have with this methodology is that they complicate it so much that it is beyond the reach of most Retail investors.

2. The bids on NSE and BSE were separate. Usually in an IPO one gets a cumulative bid list on either sites. Second is multiple price methodology adds to the complexity. If one bids too  high, then one gets allotted at a very high price irrespective of what the cut off price. If one bids very low, then the bid has to be tracked the whole day.

3. The mid caps are outperforming, while the index is slowly rising, this is the sign of a good bull market.

4. The signing of Rafale jet deal shows that the Government is intent on some action.

5. The Outlook upgrade by Moody's also helps in improving the investor sentiment.

6. The first set of corporate results will be out next week and they will set the tone for the markets.

7. 8949 is the ceiling for the current up move. If we breach that then we are headed for new highs. 8894 is another critical level to be conquered. 1 may fall from any of these levels to make another bottom between 7900-8200 region.

The strategy remains to buy on dips, good quality stocks.

In response to a reader query, I would not recommend Option Trading as a strategy but one can write higher level call options like 9200 call.

Sunday, April 5, 2015

Range Bound Market Ahead

The markets gained 2.9 pc in the 3 day truncated week. We are in the midst of a corrective bounce up. Let us see what April brings for the markets.

1. The events of March with Advance Tax payments, booking of short term losses are all behind us. The new financial year begins and lets see what can be immediate triggers.

2. The Corporate earnings are still at least 1 week away. They can provide direction to specific stocks.

3. The Parliament session recommences on April 20th and till then I expect the markets to move in a range of 8400-8800.

4. If we take this down move to be corrective in nature, then it should have 3 waves, 2 down and 1 up.

A - 9119 - 8267
B - 8267 - 8592 (already done), 8694 or 8795.
C - from the above top to 8000- 8200 levels.

Much of April should be spent in this journey within the range.

5. The Global markets also have no major triggers to speak of.

For astute traders, they could book profits at 8600-8800 and make fresh re entry at lower levels.

There is a lack of news flow in the coming weeks either to take the markets up or down.