Nifty Futures 27th Oct 2016

SGX Nifty

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Nifty Futures 27th Oct 2016

Nifty continued its slow steady move lower. As per our analysis we do not see prices sustaining on the higher side and we do expect prices to keep trending lower but please keep in mind that pullbacks will keep coming from time to time and on bounce traders can sell.

We do not see any sharp directional move in either direction price will zoom higher one day and then fall sharply the next day but overall trend will remain lower. The price charts show that there is loss of momentum and the dollar index is suggesting a FED Rate Hike and we see Indian rupee taking a hit in the near term. We also expect to see risk off by some major players in the market.  One of the most respected names in the Indian markets has told all of his followers to exit from the Indian Markets.
He has a great track record in value investing with the exception of a few select names he told them to exit and he is as of now next short on Axis Bank. Knowing his style of trading generally this person does not short sell and since he has means there is something terribly wrong and that information is not in the public domain for now.

Axis Bank’s numbers this time were one of the worst that we have seen in a very long time in the private banking space and many believe that the worst is over for the bank but we have been been saying that NPA problem for Axis Bank has not ended and further we reiterate that it is not going to end in the near term the simple reason for that is that even though the Axis Bank did come and adjust around 50 percent of its existing bad loans that they call the “watch list” but the fresh additions have not at all been addressed and we see the fresh additions in NPA’s which will comprise of from the Real Estate Sector, Retail Finance sector, Diamonds and exports sectors these will in the coming days put significant further pressure on the bottom line and till the time we do not see these numbers come out we do not think that this NPA problem is behind us.

Further we do not see any value in Axis Bank at current prices as based on our analysis and calculations only 50 percent of the problem has been accounted for till now and still fresh NPA’s will be reported in the coming time taking a significant toll on the bottom line profits of the Banks. When one of our team associates did talk to the management of the company I was personally surprised to here statements from the management like “This is our best guess”  “We do not know when this problem will end” “Fresh bad loans have been rising” “Fresh NPA’s could be seen and we do not know how much will it be” So when we calculated the confidence index of the management (another unique parameter that we developed which is based on voice analysis) we were very clear on one thing and that was that the management is not clear of what the hell is going on in their own bank and they do not know that the oncoming tsunami of bad loans is going to be devastating. They was only one background in most of top ranking guys we spoke to and that was “Hope” so effectively they all are hoping that something will change and hence they will have a lower NPA number and better bottom line. We once again reiterate that we do not recommend any exposure to this bank in the near future.

Good Trading To You!

36 thoughts on “Nifty Futures 27th Oct 2016

    1. I have been a investor in RBL even before listing and continue to hold the share but at current price I do not see any value in RBL to add fresh. W R T I really like the way they are going about it but from IDFC Bank’s perspective I do not see that they will make much money in the near term also their cost of funds is much higher than that of most other Banks at the same time they have a advantage of a clean balance sheet because they are new. Bottom line I do not see value at current prices to invest a fresh.

  1. Hello sir there is lot of tension at loc with pak n at the same time America n Russia may hv some conflict so do u see any war or world war like situation pl give clear ur view n if update then upto till because earlier also I asked same

  2. Your team spoke with the management at axis bank ? ???

    And you own Rbl before listing ? ??? … Guess your a private equity investor now ?

    Mallav Bhai, we argue with your views, par etna bhi effect mat daal ..

    1. You can get the shareholders list of RBL and see the names of myself and my family members (Drago & Fly). I request you to please verify the same. The purchase has been done from 3 I capital which deals in unlisted shares for your information. Similarly you can also see the stocks that I have recommended like MSL (between me and my family we own significant chunk) please do verify the same by procuring the shareholders list from the respective company company secretaries.

      With regard to Axis Bank.

      a) I did not speak to Axis Bank management directly but one of our associates did.
      b) I did listen to the call later on

  3. Sir,
    As per you said, dollar index standing firm above 98.6
    Even then, do you see fed raising interest rates in November or you think it will be in Dec. November increase would be a surprise and that would definately tank all the global markets. But don’t you think FED would prefer not to hurt the market sentiments as this market has been proposed up by the central banks themselves.


    1. does not matter when rate hike is coming in the next 45 days at best even if it is dec and markets have not positioned themselves or not factored in a Nov hike

  4. I am not into stocks .But Mutual fund investor Is it advisable to sell all my mutual funds Now it self? .No chance to gain money like trading if index come to around 6k level as mentioned in your blog.unfotunatly you have not mentioned time of lowest ?

  5. Sir
    I am not into stocks .But Mutual fund investor Is it advisable to sell all my mutual funds Now it self? .No chance to gain money like trading if index come to around 6k level as mentioned in your blog.

    1. 12 months fwd I dont see any MF making money from current levels. We will have one rally for the upside which will be good for buying but it will be get in and get out trade. On rise you can start booking profits.

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