Nifty Today’s Trend, Prediction, View, Target 1st Aug
While the broader markets are way off highs which are in line with our overall cycle predictions but Nifty moved higher today and made yet another life high with the blessings of Infy, Hindustan Unilever and Reliance Industries. We were expecting and predicting that Nifty will come towards 11225 and Nifty has surpassed that level also but the most important question now is that how long will this upmove go on? The answer to that question is much more complicated that one thinks but let us look at the overall situation in an objective manner. When we analyze we look at the overall picture so we do take into account what’s taking place in the Global market and most specifically S&P500 with which our Nifty has a huge correlation but over the past two trading days even though S&P 500 has come down from 2848 to 2802 which in percentage terms is around 1.8% and is in line with our turning time and price area but Nifty in the same 2 trading days Nifty has moved up so historically this is a perfect divergence in the near term but what we have observed that Nifty does have a good correlation to that of S&P 500 and hence either S&P 500 will turn up or Nifty will turn down but we don’t see that both these markets will move in the opposite direction it is possible for a few days but not on a larger time frame. So S&P 500 is indicating Nifty could turn down. If we take a look at the USDINR pair then also we see that INR has depreciated from almost levels of 62-63 to almost 68-69 and the trend there remains higher so yet again from a historical stand point depreciating INR has always taken Nifty lower not higher. Till now Nifty has not reacted to the INR yet we do take INR depreciation into our consideration for overall market analysis and we feel that sooner or later INR will start affecting the rise in the markets also. The same goes with crude oil which has moved all the way from 28 to 70 and yet Nifty remains at life time highs so what is actually going on as most people know it that a few stocks are being held as mentioned above and Nifty has been moving higher while the broader markets are doing something else, the broader markets are off from the highs by a significant margin some stocks are off by 70-80%.
So what to expect from the broader markets and Nifty from here onwards? As per our analysis, view, prediction Nifty we feel for the next few trading days could become sideways but eventually the life time high valuations of 28.20 trailing PE will force the Nifty lower the question now is that will the ones that were leading the Nifty higher lead it lower or the beaten down names like PSU Banks will get thrashed even more from current levels while the leaders consolidate that we will see later but keep in mind that there is no exception in history that Nifty has sustained and moved higher from such PE of 28+ and that is also true with regards to the international markets so remember that though markets are being manipulated and Nifty has been artificially kept higher the picture on the ground is very bad. Just to give you an e.g. Maruti had a few weeks waiting period for its cars just a few months back but today most of their products are delivered within 48 hours so that says a lot about the demand situation, even sellers like Honda who generally do not give huge discounts to push sales are doing so because there is a pile up of inventory taking place. The point is not to show you the cars pile up issue its to show you how quickly demand is contracting and inflation which was last reported at 5.71% is picking up. We feel that rising inflation which will lead to rising interest rates and combination of lack of demand will not see returns from mutual funds or portfolios like the current scenario (most NAV’s and portfolios are well in the red for this calendar year ) and with regards to the broader stock markets we feel it will be extremely stock specific and not even sector specific just take the e.g. of Maruti and Tata Motors. Maruti is at the highs and Tata Motors at the lows so the same will be true for overall market also it will be a stock specific trade.
Good Trading To You!