Nifty trend / Nifty prediction 12th March 19

Nifty trend / Nifty prediction 12th March 19

Nifty trend today was bullish and has finally broken above the trading range we have been trading in for the past many months now however even post the breakout there is no real thrust as of now so keep in mind that though the breakout has taken place there is no real volume or real thrust at least for the time being.

Now many of you have been asking me about what is my Nifty prediction for the coming time especially with elections being declared. Many of you are thinking that if BJP comes to power markets will start to rally again and the bull run will come in again well frankly based on multiple pieces of evidence we do not think this will pan out so let us consider some of the possibilities.

Let us assume BJP or NDA comes to absolute power and in that case sure we see the Nifty rallying and we could see some broad rally also for a few days but we do not see the rally sustaining in that case so if NDA comes to power in absolute majority then we could see around the levels of 11500-11800 give or take a few hundred points but the point is that in my prediction system if this happens then markets will make a top around the election results time and then markets will start a down cycle and we say that because across verticals and sectors there is a slow down which is very sharp and we see sharp contractions across the board so if the Nifty does make it to around 11800 on the euphoria of NDA coming to absolute majority then we don’t see much returns from the broader stock market.  Also around the levels of 11500-11800 most of the valuation safety is gone and assuming flattish growth for Nifty we see growth fully prices in around these levels so historically from such hefty valuations no one has made money so if we do see a spike because of NDA coming to absolute power then it will be prudent to book profits in longs and wait on the sidelines.

Keep in mind that regardless of who comes to power the on-ground economic activity and in fact even global slowdown is getting very sharp and hence we don’t see a runaway market only because of the election factor if there is a spike in prices due to the election news it will be better to cash out because eventually, earnings move the market and not election results so in a scenario where earnings will not grow we don’t see hefty valuations sustaining for longer duration of time.

So, in a nutshell, I don’t see broader markets rallying much above 11500-11800 area there could be a few days around those levels but we don’t see that sustaining since valuations become very hefty around those levels. Now the important point to keep in mind is that though the broader market does not look great around 11800 levels assuming NDA wins the point is to look for deep value stocks which will give returns regardless of who comes to power so look at those set of stocks where the earnings are bottoming and have no debt to service and have good management and most importantly the stock is cheap. There are some select set of stocks where these conditions are available and a lot of money can be made in them so look at these set of stocks, keep in mind that even just buying and holding these set of stocks won’t be a great strategy so churning will have to be done in these set of stocks to make money in 2019. For instance, what we did in Kesoram got in at 58 booked part at 78 and now holding remaining if we feel that there is near term upside risk then we will get out of them and wait so this strategy will have to be deployed to make money. 

Good trading to you!