Target 25 K Nifty Achieved. Book Profits

 On May 15th 2024, when Nifty was around 22K, I had given a target of 25k. The target is achieved and now one can book profits.

I expect some kind of correction before the next leg up.

On Target for Nifty 25k

 Just a quick update on the January post. We are on track for Nifty 25k by H1.

1. If anyone wants to buy any stocks, now is a good time.

2. For the rest of the year I am very bullish on commodities especially precious metals.

Everything will go up for sometime followed by a big correction.

As Day follows Night and vice versa correction will follow the bull run. For now enjoy the ride!!!

Elliot counts revisited

 Revisiting the Elliot counts,

1st wave 16828–20222 3394 points

2nd  wave 20222 18838; 

3rd wave unfolding

3.1 18838 22124       3283 points   

3.2  23124 - 20875 or 20481

3.3 ???

3rd wave target can be 23k to 26k 

Then 4th wave to follow and 5th truncated if 3rd wave is extended.

So target for Nifty 26 to 28k in H1.

Strategy book profits from 25k onwards

May 23: Election Results played out as usual

 The Karnataka results are out and as expected the Congress has won the elections. I had predicted that the markets would do well till May and here we are a rally of about 1600 points on the Nifty. What lies next for the markets?

1. After the Karnataka elections now there will be people clamoring saying that the BJP is finished. 1 swallow does not make a summer. There would be elections at State level but Modi Government remains set for third term in 2024.

2. The monsoon forecasts do not look too good and that should cap a runaway rally in the markets. The monsoons have been good for at least the past 4 5 years and now right now a poor monsoon is on the cards.

3. The markets have rallied about 1600 points from the bottom in Jan Feb and are now within touching distance of previous highs. A correction is round the corner.

4. The recession has started in US and huge layoffs in IT companies in the US and in India are also muted pay hikes. The sentiment has been damaged. when the sentiment is damaged, people start spending less money. It is a self fulfilling prophecy.

5. We have come to the end of the rate hike cycle and that should bring relief to the home loan folks.

The markets should correct and that gives us a chance to reflect on what next to be done.

April 23: Markets should still rally

 The month of March has come and gone. The Markets were down by about 1.5 pc. This is the 4th month in a row markets have closed negative, Let us see what April has in store.

1. By law of probability, 5 red monthly candles have almost never happened. So April should be a positive month. The market has been oscillating around the 17000 mark.

2. The US Bank crisis should blow over. Inflation is rising and it is a localized issue. Interest Rates India should also rise by 25 basis points.

3. The Karnataka elections in May and results on May 13th will be a trend decider for the Indian markets. Till then the markets should rally.

4. In times of uncertainty, Gold always rises and Gold will do well.

5. The Indian markets have shown great resilience in times of global uncertainty so I expect them to do well and at least reach 18500 if not higher.

6. The Ukraine crisis will again come to a boil with Spring here and a fresh offensive being readied for a launch.

If I was an Indian investor, I would lock into high interest rates, focus on my short term debt portfolio, avoid equity markets and book profits in the existing portfolio.

March 23: Markets likely to rally

 The budget has come and gone. The Adani saga also seems to be settling down, What does the month of March hold for the Indian Equity Markets? Let us try and explore.

1. Last 3 months the markets have fallen and a relief bounce of 8 - 10 pc is on the cards. 18500 to 19000 is the range we can expect if the market rallies. If the markets do not correct in Jan to March period, then May we have a bigger crash.

2. The real election results will be the Karnataka ones in early May. I see it very difficult for BJP to win. The current infighting, an ineffective Chief Minister coupled with JDS and a strong Congress in Karnataka.

3. In 2004, the Lok Sabha results were a a similar trigger.

https://www.rediff.com/money/2005/jan/12market.htm

4.  The weather forecast is not too promising. Hot summers followed by a poor monsoon means we are heading towards a deficient monsoon. We are also entering a period of election results. Nov 2023 has 3 other states MP, Rajasthan, Chhattisgarh where again Chhattisgarh is a lost cause.

The Risk reward ratio becomes unfavorable above previous all time highs. At 16K it becomes favorable.

To summarize next 2-3 months, I am bullish but bearish in the longer term.

Let us evaluate in the first week of April which way we are headed.

Feb 23: Decoding the Budget and the Adani saga

 As promised, restarting the blog after a sabbatical. My goal will be to publish it on a monthly basis at least. Let me start off with trying to decode 2 of the hottest events currently namely the budget and the Adani saga.

First of the budget:

1. The budget is a non event in most years and this year the main talking point was the sops given in the New Tax regime. Leaving the numbers aside, let us look at the big picture. The rightly stated goal of the Government is to do away with complex tax exemptions and simplify the tax process. For example till a few years ago we were submitting medical bills of Rs 15000 to get the exemption till the Government gave it to everybody scrapping the cumbersome process.

Similarly it will be better to scrap the home loan exemptions and straightaway give the benefit to everyone who buys an affordable home. When I as a middle class person bought an affordable home in 2015, I was pleasantly surprised to be given a tax refund of 2 lakhs at the time of possession by the Tatas in 2020 because the Government gave them the benefit.

The Old Regime will be sunset in a few years and only the new Regime should exist.

2. The second point which everyone missed was increasing the Senior Citizen Scheme limit to Rs 30 lakhs from 15 lakhs. While this is laudable, the rates of 8.1 pc are too low. The original rate of 9.3 % was correct. It is too much to expect people in the evening of their life to gamble in the markets. This anomaly needs to be addressed.

Rest all are policy issues and have almost no bearing on our day to day life just good entertainment.

Next is coming to the Adani saga:

1. It is purely a commercial short selling attack as very common in the US. As per the pro and anti Adani camps various stories are being embellished. Remove the outer layers and few things stand out.

a. The stock prices in PE terms are overpriced at 200 and 300 PE

b. Adani groups how solid assets like airports, ports, power distribution which have solid moats around them. So, the in the years ahead, the PE multiples will shrink as the profits catch up.

c. Such projects have long gestation periods and when they start spewing out cash, they become cash cows.

d. The correct PE to buy is 20 to 30 multiples for the kinds of businesses Adani is in.

It is best to cast away the hype and focus on the fundamentals. I assure you that is a very good way to get sound sleep at night.

So, enjoy the dramatics, focus on fundamentals and sleep well at night.

I feel the markets should do well till May. Let us see.

1

Picking up the Threads

 Last post in Jan 2021, I said we should reach 15-16k which we have reached. Now what next can we expect from the markets. I expect a correction now.

1. 1 possibility is we correct 7511 to 16300 odd levels. A rise of 8800 points can get corrected by at least 4000 points. Levels to watch out in this case are 12940,11935 or 10890.

2. Another possibility is A wave was 12500-7500, B wave till 16300 odd levels and C wave down till 8269.

Whichever way I look the direction is down only.

Long term prospects are excellent and I will capitalize on the falls in the market.

What does Elliot say about the markets

 The markets tested new highs at 14753 and then there has been a violent correction of approx 1100 points so far. What does the future hold for the markets. Let us look at the fundamental and technical reasons affecting the markets.

Fundamentals:

1. Vaccine for Covid is here. The cases are going down and the economy is starting to fire. I see construction activity picking up and car sales sustaining. 2 sure shot indicators that the economy is doing well.

2. The US political scene is clear now and stabilized. The uncertainty is out of the way. Democrat control can mean more taxes but that is the only uncertainty.

3. The Indian budget is the immediate uncertainty for the markets. Once that is out of the way things should clear up.

Technicals:

We made a bottom at 7511.

1 count could be:

1. 7511- 9889 (2378 points)

2. 9889 - 8806 (1083 points)

3.1 8806 - 11794

3.2 11794 - 10790

3.3 - 10790 - 12025

3.4 12025 - 11535

3.5 11535 - 14753

Total 3rd wave is 5947 points which 2.26 times wave 1.

4th wave is correcting rise from 10790 to 14753 with targets of 13248, 12772 or 12303.

It could also be that 5 waves are complete at 14753 and we are correcting the whole rise.

My hypothesis is:

Wave 4 should end between 12500-13000 and we should have 1 more up move between 2500-3000 points to around 15-16 k before correcting entire up move.

Alternate theory is going back to 7511 which seems faint for now.

2020 H2 and beyond: where are our markets headed to?

 The first half of the year has gone by and there has been lot of chaos and confusion since my last post. Covid 19 has wrecked havoc. My level of 10000 was comfortably violated and much more. Let us see what can happen in the future.

1. The market is awash with liquidity and disconnected with ground reality. Covid 19 blazes on relentlessly. I expect the markets to move up maybe make new highs and then re test the previous lows or 6500.

2. The markets will remain buoyant in the near future as the US Fed also is pumping in huge liquidity. Next few months will be very good for traders.

3. One must trade also only in blue chips else one can lose one's capital.

4. Gold remains a safe haven and is a buy on dips as a hedge.

5. US Presidential elections are a key turning point and if Trump loses or if there is chaos after the results the markets will nosedive.

The key things for a sustained bull run are:

1. Cure for Covid

2. Stable US Government

3. Stable Indian economic policies

Right now only point 3 is somewhat under control. The run up is factoring in that a cure for Covid is given, things will normalize. If bad loans start popping up as they will after the next quarter results, then the markets will correct.

It is a traders market not an investors markets. Use the rally to throw out laggards.

6350 were multiple tops in the past they will be strong support. 12400 will now be the new resistance points.