Nifty trend / Nifty prediction 24th April 19
Nifty trend today was flattish and over the past three trading days, we have seen a fall of 273 points from the high made two days back while there are many traders and investors who are buying the dips and buying across the market as of now we do not share the same level of optimism as they do. Once again we are stating some of the reasons why we don’t see a bullish market in the coming days, sure there can and will be some upside or pullbacks that’s possible but we do not see any situation where there is going to be a massive bullish cycle from current levels.
Valuations remain extremely elevated and though we have said this in the past also we are once again saying that no one in the history of the market has made money by buying at such hefty valuations from a broad market perspective and each and every single time we have had a valuation like the one we are seeing as of now each and every single time we have seen sharp falls in the markets. You can take 1996 or 2000 or 2008 or even recently the fall that took place from 11760 towards 10000 levels never have such hefty valuations made money for anyone and we do not think that history will be changed this time around also sure there will be some exceptions but we don’t see that the case for the broad market.
Crude oil back above 74 almost touching 75 and that’s not going to be great either for fiscal deficit or for inflation. As of now there is a hypothesis that because inflation and fiscal deficit will be lower we will see further rate cuts from the Reserve Bank of India however we do not feel that will be the case because as of now due to election season the pump prices have not been moving up however once that the election is out of the way we will see pump prices moving higher once again and keep in mind that there have been no significant pump price revisions since Brent crossed 60 so we expect a net of 5-7 Rs increase in prices and that will not argue well for inflation which in turn will curtail RBI’s rate cut stance so what everyone in the market is expecting that another 0.25 bps rate cut from the RBI in the next meeting we don’t share that view at least for the time being.
Sentiment showing euphoria levels. This is another problem for the market. Time and again we have seen that whenever the entire market has a similar view for a similar reason it has never been a great time to be on that side. As of now most traders and investors are very bullish because of the reason that they believe that NDA will form the Govt by itself but that as per our analysis that has already been priced in and we do not see that as a major trigger for any significant upside however the markets have not factored one scenario that if the NDA fall short b y itself then what could happen. We are of the view that NDA could fall short of majority mark and will require support from TRS and BJD so although the view is that NDA will retain power at the center it does not make any difference to our analysis because the event will come and go and once again keep this point in mind that regardless of who forms the Govt in Delhi we don’t see equities as an asset class doing very well broadly speaking sure there will be some exceptions where deep value is available however we don’t see much value across the board and in a background where economic growth is slowing down we don’t see a case for stocks to do great. There are many other reasons also however we will not be discussing them in detail here as of now.
If you are only trading on the basis of this post please use your own risk management and then only trade. Please do not over trade and always keep your risk in check. Based on my Nifty trend analysis / Nifty prediction we don’t see any major upsides from current levels minor volatility of few hundred points is possible however not sustainable as per our prediction.
Good trading to you!