Nifty Today’s Trend, Prediction, View, Target 26th Oct
Nifty today’s trend was again volatile but the important take away from Nifty’s move today and for that matter yesterday was that momentum is reducing on the lower side. Early in the morning Nifty moved lower but failed to sustain at the low point and repeatedly was failing to move lower this despite a massive sell off in the world stock markets over the past 2 days. Indian stock markets have been clearly outperforming the global stock markets over the past 2-3 trading days but once again let us look at the overall picture.
Indian macros are improving and we expect it to keep improving over the next few months. So the first part of the component is the Indian rupee which is moving in line with my prediction and view and is not sustaining on the higher side. Please keep in mind that I am not suggesting for one minute that we will not see pullbacks in the rupee during this move towards 71-72 in the near term but eventually rupee will keep moving lower towards the targets of 71-72 in the short to medium term once the rupee is around the 72 area at that point in time we will review the move but for the time being we see good trail wind for the Indian stock markets from the rupee.
Crude Oil as we have predicted crude oil is moving in line with our view and has been making consistent lower tops and bottoms and we expect the same to continue. We know that there are many people and traders who are calling and predicting that Crude Oil will move towards the 100$/barrel target but we do not feel so. We had clearly mentioned at 86$/barrel that near term crude oil has topped out and as of now It looks like crude oil has made a medium term top anyways we do expect lower targets for crude oil in the next few months so this too will keep making lower tops and bottoms. Once again keep in mind that crude oil will keep giving pullbacks but that will not sustain on the higher side for the time being. Based on the next few trading days we will see if a major long term top is in place or not but for the time being it is safe to say that near term we will see lower targets.
Amazing valuations in some select pockets. Regular readers of this website are well aware that I have been saying for sometime that there was not value in the overall market for making any significant investments but as things stand as of today there is reasonable value in the broader market in reasonable valuations you will end up making around 15-20% over the next 12-18 months horizon and in some select pockets there is deep value. Generally deep value stocks end up giving anywhere between 40-60% returns over the 6-12 months time horizon and that is what I am expecting from the stocks that I have bought and that is what I am recommending to everyone here. Buy into deep value stocks and hold you will end up making excellent money over the next few months.
Tail wind for equities besides the improving macro outlook we see that bond yields are falling and stable so we do not expect RBI to hike in the near term so this will ensure that cost of capital does not increase for Indian inc and hence this too will end up supporting the markets. There are many other factors which I will highlight over the next few days but for now look to build a solid portfolio and deploy cash into high quality names where deep value has emerged.
From a traders perspective my view, prediction remains that currently Nifty trend is oversold so we could see sharp bounce towards retracement targets of —- but in my sense what I see it’s possible or rather highly likely that a new bullish trend is likely to be formed and we will see significantly higher targets if the new trend begins. One more reason I feel that we could see a sharp rally is that the momentum has become very shallow and at every dip it is very evident from the screen that Nifty is loosing momentum on the downside, besides this we see that the street and the sentiment has become extremly bearish and negative. No one is intrested to buy even though we have some high quality names where the stock is trading at or lesser 0.5 book with clear earnings visbility and high EPS reporting, almost debt free so in short the kind of pessimisim that I am seeing from majority of the retail crowd is suggesting that they have panicked at the place where prices are at deep discount and at the very same time there are huge or rather the big guns of the street who are aggressively buying into high quality names. This is actually a classical reversal behavior that I have seen from the retail crowd which was aggresivly buying at higher levels of 11600 and now they are in sheer panic.
Bottom line is that the smart money is buying delivery in high quality names where deep value has emerged, there is fear in the minds of general traders and small investors or even the MF or the retail SIP guys seem to have been rattled this time, charts and astro cycles are showing clearly that the oncoming move could be very sharp on the upside. So again we suggest to buy on dips and create a high quality portfolio.
Good Trading To You!