Nifty Today’s Trend, Prediction, View, Target 24th Oct
Nifty opened lower today on weak global cues and finally managed to close the day little off the lows at one point Nifty was almost lower at 10100 below the 10138 lows but some recovery towards the end of trade took Nifty a bit higher. Let us look at the overall picture now.
The fall in the Indian stock markets started with some of the macro problems like crude oil and the weak rupee which was net effect of weak current account deficit and possibly missing of the fiscal deficit targets mentioned in the Budget presented earlier but in the second half of the fall the fall has become more global in nature so we see lot of the world stock markets falling and our Indian stock markets and the Nifty is also falling in line with the global stock markets more specifically the US markets and some EM markets. Now from a Indian stock market perspective we need to keep in mind that INR has topped out for the near term at least and I do not see INR moving below 74.50 low that we had seen a couple of weeks back (I am not saying this now but I have said this around two weeks back itself) and at the same time I see INR appreciating in the near to medium term towards 71-72 area so in the next few months we see a stable INR outlook so one part of the macro is under control so this headwind will not be a near term tail wind for Indian stock markets. The second part of the macro problem was from Crude Oil issue which we feel has also made a top (short term top or longer term top that remains to be seen but in the near term I do not see brent above 86) so second part of India specific headwind is also under control. The third part is that even though crude oil and petrol prices were rising inflation was not see rising much and with petrol prices falling or even being stable and food items selling below msp prices we expect Inflation to be lower than anticipated over the next few months atleast which will effectively translate to lower inflation and more importantly neutral outlook from the RBI so in short rate hikes also will not be seen over the next few months at least so another headwind for India inc which was in terms of higher borrowing cost for companies will be under control and since most of the market participants have missed this please do have a look at the bond yields so from a near term perspective macros and borrowing cost is expected to be stable for India. So in short India looks to be a far better place from a macro stand point than what we had seen in the first half of this year. Now to this present stated situation you add the fact that most stocks have corrected significantly some in excess of 70 percent. Now I am not saying all the stocks that have fallen by 70% are good buy’s but surely there are many stocks which have a combination of wealth creators present in them (Good Management + Decent Earnings visibility + Good / Cheap Valuations, Low Or No Debt these are just some of the characteristics of wealth creators) so in such counters we are advising a buy and deploy cash full on in these set of stocks and all these stocks that we have been buying average are still above our buying price by 5-9% and we have few more stocks which are on our radar which we will look to accumulate over the next few days if we do get the sweet spot to enter.
So from a macro stand point Indian markets should and will be seeing tail wind both in terms of the currency front as well as the Rupee front. We know that many brokerages and most traders on the street are now very bearish but the larger point is that in a situation where the macro was a headwind is now turning into a tail wind and deep value has emerged in the markets it is a time to buy into portfolio and get long on select good high and deep value good quality management names so more than a trading focus build your portfolio from such throw away valuations you can only make money.
From a trading point of view our prediction remains that we dont see much downside now and Nifty will move towards retracement targets or a fresh trend will be formed but we expect some other components and sub indices to outperform the Nifty so there should be more focus there.
Good Trading To You!