Nifty Today’s Trend, Prediction, View, Target 11th Dec
Nifty trend today was seen sharply lower based on double combination of weak global cues and Exit poll results which are indicating that BJP may not retain some states like MP and Chhattisgarh. Regular readers of this website are well aware that in my previous update we had clearly mentioned that now it is time to shift strategy and we recommended booking profits in all our stocks, Nifty, Bank Nifty which we had bought at lower levels and wait on sidelines, now as of today that strategy has worked out very well.
Now many are asking what the way forward is. Tomorrow is a very important event day and many are saying that if the BJP does not see or retain states like MP then we could see lower levels of 9500. Frankly what happens tomorrow is another story but let us look at the overall scenario.
What drives stock prices and creates wealth is earnings and we have been predicting that earnings will remain lower than what the street estimates for the past 4 years now and our prediction as far as earnings has been spot on, now many smart traders and investors are getting bothered about earnings but as per my calculations we see that the worst of the earnings problem is behind us and when we take a stock specific approach we see earnings starting to recover one by one. I am not suggesting that entire broad market will start giving excellent results tomorrow no I am not suggesting that but from a individual stock perspective there are many stocks which will now start the earnings growth cycle irrespective of who comes to power in MP, Chhattisgarh, Rajasthan and even in Delhi in 2019 so our advice is that those stocks which have reached deep value area and are at the bottom end of the earnings should be bought into in any panic that we could see on account of the state elections tomorrow or in the coming months. As per my analysis, view and prediction we see that if you buy good stocks which have a good management, good earnings outlook, low debt or better still no debt then we see that these set of stocks will make good money so focus on buying and building your portfolio if we see a panic tomorrow because at the end of the day elections will come and go but the single most important factor which will boost stock prices has been and will remain earnings growth. So buy deep value stocks and hold them then the question is you will make 20% returns or 50% returns or may be more than 50% but will you beat fixed income returns ? The answer to that as per my analysis and view is yes you will beat fixed income returns by a decent margin even if you follow the guidelines that we have given here.
Now some of you have been arguing with me as to why am I becoming a bullish person as far as earnings are concerned. The answer to that lies in one simple thing and that is demand. If you see demand everywhere has reached rock bottom and we do not see further slowdown in demand and consumption. In addition to that the slowing inflation will eventually force RBI to cut rates (we expect RBI to cut rates in 2019 and infuse liquidity in the system)and this too will provide liquidity in the market and at the same time boost credit flow so credit which was hard to come by will also be available. There are many other factors which will boost demand also which I will not get into at this point in time so coming back to tomorrow regardless of who wins the elections tomorrow if there is a sell off do use the panic to buy into stocks where deep value is present. Details of where to buy etc will be given to our clients.
Good Trading To You!