Nifty Prediction Risk Reward not in favour of being long especially from a portfolio point of view. Get on as much cash as possible.
So first of all let us today understand where we are in the overall picture from a short to medium term stand point. Nifty fell very hard from 12300 levels to 7500 levels which was the first round of the fall thanks to our studies of cycles and Elliot wave and Gann wave we knew a pullback rally will come from lower levels of 7500-8000 towards 10200 by 3rd week of May or last week of June and that we did play that move perfectly from portfolio as well as trading front however now that pullback rally that started at 7500 is in a mature stage and once this pullback ends we can go back to 7500 or may be even lower from 7500 eventually in the second half of the year so for whatever this rally is worth keep in mind that this was and remains a pullback rally which generally happens whenever we see a sharp fall in a compressed amount of time. Pullback rally as per my analysis is in a mature stage and though we can see some more upside which is entirely possible I do not see this pullback rally sustaining on the higher side and hence we have been suggesting to get on high levels of cash from a portfolio stand point so just to understand that we were very bearish at the start of the year and we were sitting on 100% cash at 12000 levels because neither valuations nor time cycles and neither did the wave set up suggest any significant amount of upside and hence we were not in favour of being invested. The situation changed at 7500-8000 when cycles valuations as well as chart set up was telling us to go 100% long for targets of 10200 and that also played out perfectly now all these combined are telling us that pullback rally is in mature stage and though there could still be minor upside
Now, we know that some of you are sending me data points of sales from some companies for the past few days but the important point to keep in mind that these are pent up demands that is a result of 3 months of shut down and once the initial demand tapers data is showing us that the demand fall is going to be very severe so this in fact will lead to massive lower earnings growth for most companies which means lower stock prices eventually so keep that in mind that second half of the year demand will collapse and we also see that investors should avoid banking sector totally good banks in private sector or bad banks from PSU space or NBFC sector totally because the true extent of the damage will be known to the public later in second half of the year. Please understand that I like a few of these private banks but for the time being i wont own it because the true extent of the damage will be known by Dec and what people are currently estimating is not what the data is pointing out to be. So we are going to see massive income or top line revenue declines for all banks and once that happens it is only then we will look at buying them again for longer term because in the near term data is showing that lot of loans will have to be restructured and many will even go bad and current prices do not adjust them for the massive undercuts that they will take. please keep in mind that I am not suggesting this will happen tomorrow it will happen though over the next few quarters so avoid this sector for now.
As usual if you are only trading on the basis of this post please use your own risk management then only trade please do not over trade and always keep your risk in check.