TVS Motors - Short Term Trading View

TVS MOTORS –

This stock was in consistent uptrend and became a victim of the correction in midcap stocks ongoing since the beginning of the year. The stock made high of 800 and now 200 Rs. lower. Among the auto stocks lot, this stocks has been an above average performer, and compared to the big boys in terms of market cap, this stocks has fared greatly. We believe the present upsurge in market will bring the stock up 10% plus and it can be traded for September expiry on long side. The technical picture is also looking positive.

The given views are subject to change depending on changing market, sector, individual company and global economic conditions. Become member to benefit from market and individual stock moves. Become member to get alerts for buy and sell with targets.

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DEFINING PENNY STOCKS - EVERYTHING AN INVESTOR WANT TO KNOW AND SHOULD KNOW ABOUT PENNY STOCKS INVESTING I PENNY STOCKS INVESTING INDIA I WHAT IS PENNY STOCKS INVESTING

DEFINING PENNY STOCKS - EVERYTHING AN INVESTOR WANT TO KNOW AND SHOULD KNOW ABOUT PENNY STOCKS INVESTING 

So what is a penny stock? Basically broadly there are few classifications how the insiders i.e. the professionals and the outside investors understand the stocks or rather classify them. They are bluechip, midcap, smallcap, large cap and penny stocks.
Here cap mean market capitalisation i.e. the current price of stock multiplied by the outstanding number of shares or issued share capital of the company. So subsequently the higher the share price and compared to the share capital, the higher the mcap. Such companies fall into largecap or bluechip category such as Reliance Industries, Infosys etc.

So, looking at this definition of capitalisation, it does not become clear as to what exactly a penny stock means. Lay understanding of us all is that a penny stock is one whose price is in pennies i.e. in paisas or few rupees only i.e. 1 rupee or 5 rupee and so on. (Actually, pennies are subdivisions of British Pound/Currency, so here in India we should be calling such stocks paisa stocks rather than penny stocks!) So, let us clearly define that those stocks whose price is under Rs.10 should be called as penny stocks. Having cleared the doubt regarding the price, let us also understand another assumption attached with a penny stock invariably. It is that penny stocks or the companies are not at all in any favour of investors and not making any profit or into huge debt and losses for a very consistent period of time (here mark the word consistent, it need a lot of time to become a genuine penny stock as well!), which is the very reason of their stock prices being in paisas and rupees. We also understood that capitalization by which mainly the stocks are classified does not fit into penny stocks definition.

GENUINE PENNY STOCKS RISE -

Thousands of companies' shares are listed on the stock exchanges, and over time many firms are forgotten by the analysts, brokerage and investors community, even the promoters and investors of the very firms in question forget about it! Seriously. The point is such firms may be doing very less or negligible business and there is nothing exciting going on for a very long time in the industry they operate; making these reasons for the stock price to quote as a penny stock. But suddenly, due to some re rating of whole sector or some kind of corporate development or because the firm has started to post unexpectedly positive results and is estimated to continue to do that; the stock prices starts to move up and come out of a penny stock definition to a small cap classification.

In reality, only 10% of the quote unquote so-called penny stocks makes permanently to small cap or higher classifications and come out of the tag of a penny stock. Rest of them may rise in a cyclical manner or in a bull market and then settle where they were, a penny stock. As in the example of Jayswal Neco Industries Ltd.

MANIPULATIONS AROUND THE PENNY STOCKS -

Many times the promoters and a group of operators are very much involved in this seasonal penny stocks price movement. They find a good opportunity, a market condition and send the price up and then bring it down again, making a good some in the process. Many stocks are only listed or kept listed for this purpose only, while the companies are not doing any business for real. So, this is clear manipulation and investors and traders both should be aware not to get trapped in any such stocks. The fact is more than 70% penny stock rises are manipulated or baseless and should be avoided by no-stoploss long term only investors.

FALLEN HEROES, PRIME PREFERENCE FOR PENNY STOCK SELECTION -

Many penny stocks today you see were also some very big stock once, and sir legitimate businesses doing almost thousands of crores of business and making good profits. But due to some terrible blow to their sector or some company specific event or some other reason like scam etc.their business suffered and the stock tend to plummet to penny levels. The examples are Reliance Communications, once a great company, whose price was at 800 before 9 years and now trading at 10 Rs. It couldn't bear the competition and got pulled down under heavy burden of debt which is a menace to almost all firms in the sector. 

Another example is Unitech Ltd, based in Mumbai, once a premier firm in real estate sector; now trading at 7 Rs., recently Central Government has taken control of its board of directors. The firm got entangled in scandal of 2G spectrum and post-2008 world recession at the same time. The promoters are now in jail for fraud or non-delivery of flats to its buyers. The company in itself is still doing great business at almost 1000 crore annual sales and some losses. Losses are not new, most listed realty firms were in huge debt and making losses, few of which has been recently able to reduce the same, case in example, DLF Ltd. So, the point is you have to identify such, fallen heroes and see if there is any scope of improvement in their condition. This lot should be the prime watch list for investors who want to have a piece of penny stocks in their portfolio which should not be more than 15% of the total equity portfolio capital. The simple reason being that this companies still have the topline (sales), market share, strong promoters in most cases, established products or service. A turnaround is very much possible in these firms than those who doesn’t have these features and advantages. Having said that, an expert should weigh in different aspects at the particular point of time of investing in respect with the individual company before considering it a good buy as a penny stocks. Unitech Ltd is a good case in example right now whether to buy or not as the company is very well established, having great topline, good market share and so on, and was a leader in real estate pack before only few years.

Exceptions - There are exceptions in every things, so in terms of the definition and fine detailing while understanding the penny stocks.

Another type that penny stocks investors should eye are the firms who are going to be genuinely growing their businesses and making a lot of money due to one or the other reason. Now it is very difficult to identify such penny stocks because it is close to impossible to find out such thing. Yes, these stocks are more identifiable when they are small caps or midcaps but then they aren’t penny stocks of which we are discussion right now.

THE ATTRACTION OF PENNY STOCKS –

So what is the reason penny stocks tend to attract many investors? Penny stocks tend to attract mainly the smaller retail segment of investors. They are seldom the prey of HNI or other professional investors except in special situations or for short term trading etc. We are not saying that HNIs do not invest in them, they do invest but we are talking about the average penny stock which is mainly attraction of herd of small investors.

Main reason why investors are attracted towards these stocks is that they double their money in few days or months. Yes, they can’t do it with your bluechips like HDFCs or TCSs or midcaps like Motherson Sumi etc. The stock trading at 2 rupee has a great scope of doubling or quadrupling in 2 days or 20 days than a stock of 100 or 400 rupees. The small investors put anywhere between 5k-50k- to 100k so to multiply their money faster they take the way of penny stocks. Another important aspect related to this is the advisory tips or rumours regarding operator running the stock. Ultimately the small investor has to get the info from somewhere to identify the penny stock they want to buy. So by way of many media, the investor finds the one or more penny stock he wants to invest and then proceeds.

OUR APPROACH –

We are an avid investor into penny stock segment and strongly make our clients put 15% of equity capital allocation into such stocks. Our selection is out of the two types of penny stocks. One is the already explained above called as fallen heroes. The others are what we call gentleman penny stock. Gentleman penny stocks are the penny stocks not because they are seasonal stocks, firms of which are not doing much and neither want to do much, and stock prices is occasionally rigged up and down by operators with or without help of promoters; no, neither are the stocks which come into the above explained fallen heroes category. These stocks are penny because they were penny from the beginning. They are just small companies, that’s it.  These are the companies which starts growing and then called as growth stocks once they cross certain price levels and topline and bottom-line and comes in the eyes of mainstream investors and media. Our some of the past picks such as Marksons Pharma, Nila Infra fall into this category.

EPITOME –

ü  Penny stocks should be a must in a long term investors portfolio.

ü  Penny stocks should be baught not more than 15% of the equity capital allocation.

ü  Penny stocks investing do not follow the common principles of equity investing like PE ratio, growth rates, profit making company, and so on.

ü  Investment into penny stocks should be made for with clear time frame and target in mind. They seldom qualify for long term or permanent holdings.

ü  More than one penny stocks should be baught.

ü  Atleast 5-10 times and more return should be expected in such investments.

ü  You can not put stoploss in such investments.

ü  With sound research one can identify good penny stocks which can grow into small cap and midcap stocks of tomorrow.

ü  Many times at recessionary conditions and due to other issues, many stocks of marke business groups trade at sub 20-10 levels. They should be identified as they rise faster and higher already having many plus points to their credit.

ü  Avoid seasonal names like Jayaswal Neko, Karuturi global, Pochiraju etc. which rise and fall all the time and are pure breed penny stocks.(unless ofcourse you are a professional penny stocks trader)

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Factors that will decide the market trend for the next week l Nifty50 l Sensex l Stock Trading India

Factors that will decide the market trend for the next week

After a week that saw equity indices Sensex and Nifty end on a subdued note, the domestic equity market has a strong booster in the form of a world-beating GDP growth print going into a new week. 
         While Sensex fell 45 points on Friday and Nifty inched up by 4 points, they still gained around 1 per cent each on a weekly basis, thanks to a rise in select heavyweights from financial, IT and pharma sectors. 

A steep plunge in the rupee, negative global cues, global trade war worries and expiry of August series F&O contracts continued to suppress investor sentiment on Dalal Street. The rupee breached the 71 level, marking the biggest monthly decline in three years. The week ahead, some of the same factors may keep the pressure, but there are also a few positions. Here are a few of them.

Strong macros promise some action 
           Macroeconomic data should be steering the equity market next week. On Friday, official data released after market hours showed India’s GDP expanded faster than expected at 8.2 per cent in June quarter compared with 5.6 per cent growth in the year-ago period and 7.7 per cent in March quarter. Fiscal deficit stood at Rs 5.40 lakh crore for April-July, which was 86.5 per cent of the Budgeted figure, compared with 92.4 per cent around this time last year. Eight core sectors -- coal, crude oil, natural gas, refinery products, fertilisers, steel, cement and electricity – expanded at an impressive 6.6 per cent in July against 2.9 per cent in the year-ago period. An improvement in government finances is expected to bring some optimism to the market next week. Investors will also keep an eye on the Nikkei Manufacturing PMI and Nikkei Services PMI for August, which will be released next week. 

Trade front remains tense 

The global trade front, the US is preparing to impose fresh tariffs on $200 billion worth of Chinese goods and President Donald Trump is threatening to pull the US out of the World Trade Organisation. Talks to revamp the North American Free Trade Agreement (NAFTA) are in progress for four days now and Trump has expressed his intention of moving ahead with Mexico even as talks with Canada continue. 

No respite likely for the rupee 
The rupee is on a free fall. After breaching the 71 level on Friday, the domestic currency has declined 3.3 per cent in August and nearly 10 per cent so far this year, emerging as the worst-performing currency in Asia. Higher crude oil prices and sustained demand for the US dollar have been causing the rupee to fall. Trade deficit – mostly because of a spike in oil prices – has been a major reason behind the decline in the rupee. RBI’s restrained intervention in using its reserves is also adding pressure on the currency. “The threshold limit (for the intervention) has increased from 69 a month back to around 70.6 now,” TOI reported HDFC Bank chief economist Abheek Barua saying so. Investors will keenly observe how the rupee moves next week. While a fresh fall will be bad for the sentiment of the overall market, select IT and pharma stocks will take advantage of it. 

Monsoon performance below average 
Latest data from the India Meteorological Department (IMD) showed a deficient monsoon in the country. Till August 30, overall rainfall for the country remained 6 per cent below IMD’s long-period average. Now it is the time of monsoon's retreat. “As of now, there are indications that monsoon withdrawal may begin from the extreme parts of northwest India during the second week of September, but the withdrawal cannot be declared in haste. One has to keep in mind the spatial continuity during the process,” TOI quoted an IMD official as saying. How monsoon fares in its last leg will be an important cue for market sentiment. 

Auto stocks to be in focus 
Stocks of automakers will be in focus next week following their August sale numbers. Automakers, including Maruti Suzuki, Tata Motors and Mahindra & Mahindra, released their sale numbers on Saturday. M&M reported a 14 per cent increase in total sales at 48,324 units, while Tata Motors reported a 27 per cent increase in domestic sales at 58,262 units. But, biggest carmaker Maruti Suzuki’s sales dropped 3.40 per cent. 

Nifty technical charts indecisive 
The Nifty50 on Friday settled flat after briefly rising above the 11,700 level in morning trade, suggesting indecisiveness among traders. Negative closing in last three days has raised concerns about the continuity of the uptrend, especially since the psychologically important 12,000 mark is within striking distance. While key levels remain intact, we are betting on a broadening wedge pattern formed on the hourly charts to propel Nifty to the 11,800 level next week. Markets likely to continue the uptrend without any major correction in if there is no stress from the US equity markets on the back of the recent news factors from there, as Dow Jones Index has still not scaled its old highs unlike the tech indices such as Nasdaqs. 

US jobs number 
US jobs data for August will be released on Friday. US job growth declined in July. However, the rate of unemployment fell. Major markets around the world will track the hiring trends in the world’s largest economy in the wake of the trade disputes that the US has kicked off with major economies.  However, we do not believe this is a major datapoint that will drive the market. It could determine one day US markets moves.

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Raymond Ltd. - Short Term Trading View

RAYMOND – CMP - 833

Raymond was a stock in uptrend before it was beaten down with many of the likes of it which were in continuous uptrend and ‘buy in dips’ category. It looks that in the wake of recent market highs, many stocks are coming out of that ‘mini bear market’ and the stocks which were earstwhile in the mentioned continuous uptrend and ‘buy on dips’ category; are likely to perform very well now onwards. The question was of entry, and after forming bottom out patter and rising above important SMA and EMAs, it is now a good entry price as well.

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Strides Pharma - Short Term Trading - Indian Stock Markets l Indian Pharma Stocks

Strides Pharma – 480

As we posted our views in our last post about the stock price moves effected due to currency depreciation as well as technical reasons of being defensive relating to IT and pharma. IT story was more about valuations and while the pharma was lagging behind. It has also started performing after continuous declines of many quarters. It has not started showing expected profits but the technical + news factor set up are clearly in favour and stocks ready to go up for the short term till the front line core economy stocks remain languish due to many domestic and global reasons; just because something has to go up as well when markets are hitting new highs, apart from 5 stocks!

So Strides Pharma net profit declined, still it is a good buy for short term trading purpose as it is showing bottoming out formation.

We think it can go above 600 and traders can use futures and options segment as well to trade it.

Lupin recommendation given just before a day is already in profits of 35% in call option segment.

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Short Term Trading View- Lupin & Pharma Stocks - Very Brief Idea

Lupin Ltd.CMP -880

As you can see, the pharma stocks are presently in a short term uptrend after a continuous decline since many years as well as having witnessed 6 months of market sluggishness in FH 2018. We are seeing good rise in pharma stocks as a defensive play in the present market environment where only few index stocks have risen and taken market to new highs. The IT and Pharma are witnessing special short term trading momentum also due to the phenomenon in forex markets where the Indian Rupee is seen at its new lows agains the USD. Pharma, just like the IT firms are getting majority share of their revenue and profit from overseas

So with support from the above logics and some frontline pharma stocks almost making 52-week highs, Lupin is also above its 200 DMA in a way first time since 2 years. We believe it will touch 1000 and then might go ahead. You are looking at an hourly chart where it has formed a bullish inverse head and shoulder pattern, while the RSI, MACD picture is also favourable as well.

It can be traded by taking position in Call option as well.

The given views are subject to change depending on changing market and global economic conditions. Become member to benefit from market and individual stock moves. Become member to get alerts for buy and sell with targets.

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Oil India Ltd. Trading View For Short Term

Oil India Ltd. Trading View For Short Term

Oil India Ltd CMP is 211. We expect a short term jump in across board oil marketing firms. They have been falling on the back of rising crude oil prices and general market decline over the last 6 months.

Oil India Ltd’s is coming out with good results, and so we believe with the other OMCs as well. There is also a great case for technical bounce back from the continuous decline and oversold situation. We recommend to play with Call and Put options rather than futures which is more safe, strategic and profitable, with positional view. With the decisive attire of the central government to not pile up subsidy losses in OMCs and the easing of crude oil prices, we believe that OMCs are likely to stay neutral to positive from this levels onwards. Even trying to touch its nearby resistance of 50 and 100 DMA on daily charts; OIL can go to 220, 230 levels.

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GAIL stock price movement update for traders and investors

GAIL stock price took decent support around 300 level in recent market decline and since in steady uptrend forming rounding bottom pattern in a prevailing uptrend.

Target on the upside could be 390, its old high and then can rise above 400 to make new highs subsequently. Decline below 350 is not expected. In case of any adverse stock specific news we can see decline below. We also have news flow related to hiving off its different businesses, so will have to look out regarding those developments as well.

Gail is a huge oil and gas segment PSU, otherwise plagued by the rise and fall in global natural gas prices.

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Playing Chess OR Trading Markets, One Must

Playing Chess OR Trading Markets, One Must

·         Focus on the process

·         Keep their fears and anxieties in check

·         Not worry about unseen threats they can’t control

·         Understand the nuances of conflict

·         Enter their decisions somewhere between “instinct and reason”

·         Not defy the lessons of history

A game of chess is pure. It is a free market with a level playing field and a product of spontaneous action, not human design. Unfortunately, one cannot say the same in reference to the markets.

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THE CONCEPT OF STOPLOSS AND AVERAGING IN INVESTING : What To Do When Your Stock Price Comes Down?

THE CONCEPT OF STOPLOSS AND AVERAGING IN INVESTING

Stoploss and averaging are concepts that a regular trader knows very well. Stoploss is a price level where the trader ‘stops losing’ in any trade. While averaging out or averaging down is if not opposite of it but falls way on the other side of the meaning of stoploss. It means to increase the trade size when the trade is in loss. For example, trade X has bought 1000 shares at price of Rs.100 and, the stock falls to 95; he had decided to make maximum loss of 5000 and so he exists at 95. Here 95 was stoploss. Now if X decides to buy more 1000 or certain quantity at this declined price or at a little more lower price of 90 for example then he is said to be ‘averaging’ his position.

Averaging is considered to be one of the top five trading mistakes. And (to keep) stoploss is considered to be one of the top 5 important requisitions for successful trading.

So, thus these both are concepts in trading. But in investing there is this presumption that you do not require stoploss. Yes, averaging out is seen among many investor. Averaging out is employed many times as part of their basic investing strategy or as a contingency. However, it is a fact that no investor buys a stock imagining that it is going to come down 50% or more, as averaging at decline of at least 25% or more is only prudent. You can see how, stoploss concept is rejected simply when investor opts to keep the strategy of averaging in his arsenal of tools of success in investment. We have explained 3 stages of investing in another article. This practice comes at the stage of managing investments. We will not call it new investment. When you have bought 1000 shares of X Ltd at 100 and buy 1000 or so more at say, 70 or 50. Now your average or cost price on all 2000 shares is not 100 but 70 or whatever.

Are we in favour of averaging? Of course yes. We believe it to be one of the most important concepts to be considered and used by investors for success in investing world and gaining good returns. Does this have pit falls, yes it does. In fact Watrren Buffett, the legendary investor, has said, you should not invest in a stock, which you cannot buy or will not want to buy when it may decline 50%. Same advice has been given in his lessons buy Indian value investing master late Shri Parag Parikh in his teachings. There are many ways to look at this concept. First is that you make sure that whatever you is you are buying at cheap prices or at good value. There is a good margin of safety. And even after that for any reason the price of it declines you should be willing (not compulsory) to buy it more. This states your confidence in your original purchase and also brings down your average buy cost, making it perhaps a further cheap buy. So now also you will probably need smaller rise to make money if you are looking at capital appreciation through rise in stock prices. See, averaging or buying more shares when your already invested share falls is not kind of compulsion, if you are not averaging out it doesn’t mean that your purchase is not cheap or you do not anymore have confidence in your investment into that company. You may just not choose to buy it more simply because you do not want to hold more than the number of shares you already have due to variety of reasons like the limitation of your capital, your overall sectoral or portfolio strategies and so on. You also have to do your research again in case any fundamental or other vital change has happened which itself demanded the stock price to come down to adjust to new lower valuations due to the development. In that case, you have to reconsider averaging out your investment in that stock or decide to average on further decline only when your average purchase costs becomes reasonably cheap.

I think we mostly discussed about averaging and not stoploss, it may seem. But we did. Stoploss, in our opinion is not a concept in investing. It may be for huge fund managers or hedge funds and so on. But for retail guys like you and me. Following the averaging strategy is better than following stoploss strategy. They are not strategies per se, but approaches. Yes, if you device them calculatively into your investment planning then they become important parts and parcel of it. See, the huge funds have to cut losses, they have to show quarterly profits, sometimes they bet big on speculative stocks and growth stocks with steep valuations. So they know when they have baught at 50 PE, and if its coming down they get out at 35 PE, because they are sure that now its going to get worth 20 PE or something. So, they hit the sell button and get out of the investment position. Another thing to keep in mind here is that with huge funds, they have trading and investing concepts all blurred up mostly. We are not talking about long only and long term funds. All other funds are aimed at profits. If they are making good money they get out. And may be buy again. So logically concept of stoploss seems to fit in their investing strategy. But for retail guys like us, its best to enter an investment with complete prudence and good valuations etc.along with readiness to average at lower levels (unless ofcourse, you are investing like them hedge funds for short term or for a targeted return only and have predecided to get out of the particular stock in case of a fall of so and so percentage. But in that case we don’t call it pure investing or long term investing. We should know it by short term trading. That is the right word. As it is not either pure trading nor pure investing). The whole base is that you can not put stoploss while investing because you are buying the stock with full cash and not in margin and you are buying it for longer duration and it is not for intraday or till next expiry. These are technical reasons apart from the basic arguments of value investing. Many of you will say what if a company, when we invested say, before some months is no longer worth investing and the fundamentals have changed and so on. Do we still hold it or exit at some so called stoploss and save the rest of capital?. Yes and no. Because you should have thought it out before investing. Why did you buy such stock and at such rate. See, 80 pc of time unless it is a market meltdown or recession, stocks do perform well and if your company is doing well it is unlikely that it is going down from the price of you investment even after that price is a good bargain price. Also as an investor you have to keep one thing in mind which is that over the short period the price of a stock just like a commodity is driven by demand and supply rule. But over the long term it is driven buy demand-supply rule and valuations. Here we are pointing out at the stock price where it reaches over the period of years after building bases in technical terminology and not the price range it gyrates over the period of days or months and doesn’t stabilize there. Now coming back to the point. If you have to exit because some of your stock is down and out and the firm is not going to recover or the sector has seen a huge fundamental shift towards worst then you got to do what you got to do. For e.g if you had Kodak, or some stock of satyam computer at reasonable price valuations, you had to exit at loss, making it a stoploss. But again like we said, if you predetermine all possible variations and follow prudent value investing rules and stick to the plan which ever you have made, you will likely not require to get puzzled with use of concept of stoploss in your investment ventures.

So, now you understand clearly, the concepts of stoploss and averaging in investing. The bottom-line is that you got to have a clear understanding of both and a very clear determination as to what are your approaches in regard with your investments, weather its pure investing or if some stocks you have bought is for short term without prudent investment valuations and you will exit it if it goes down certain points and so on. There is not much written or explained so far regarding these two concepts in investment arena. But knowledge of the same seems very necessary looking at the effects it can leave on your long term return on investments.

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Indian Stock Market update as on 17 July 2018

Market update as on 17 July 2018

In our last week’s market update, we mention how Indian markets can touch 11000, the NIFTY life time high in the coming week and languish there. We saw that till the week ended 13^th july, the market scaled to those highs with the help of Infosys, tcs, reliance industries, the hdfc twins and ITC with erratic individual stock moves in other stocks. We also foretold about the due bounce back in some frontline midcap and smallcap stocks. However that rally doesn’t seem to be holding at least as of now (as of this writing on Tuesday 17^th july).

We continue to hold the same view that the market should rally due to 5 individual stocks which will continue to rally along with the IT sector. We believe traders should do positional trading in them by taking delivery or buying call options for July or may be now august month. The bounce back rallies in beaten up NBFCs and other counters fads fast so be careful to trade in them. We believe new highs can be made if 10950 level is sustained, in a couple of week only. We are fortunate that Dow and other global markets are also languishing and not tanking for reasons whatsoever. The usual suspects like IT, RIL, some autos and some specific stocks from different sectors which are strong and rising, will continue to perform so take long in them is prudent advice instead of advising to short in the already too much beaten up and oversold PSU, NBFCs, Infra, cement and such counters.

The given views are subject to change depending on changing market and global economic conditions. Become member to benefit from market and individual stock moves.

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Indian & World Stock Markets Update & Status As On 7 July 2018

Indian & World Stock Markets Update & Status As On 7 July 2018

The Indian stock markets continued to remain sideways, during the week ended on 7 July 2018. The lack of sell off helped the new listings like RITES, FINE ORGANIC and VARROC to give 5-20% gains.

The global markets also remained sideways with erratic up and down moves of 1-2% on up and down both sides. One can argue that has been the behaviour of the market since last 2 months at least.

The lack of trend on either side across the financial markets had been due to the international and domestic factors like that of change in RBI stance regarding interest rates, USA central bank rate hike, Donald Tump implementing his tariff threats over China, China retaliation measures and further counter action threats, the upcoming 2019 Loksabha election in Indian and the toughness faced by the incumbent PM Narendra Modi. As far as the ‘uncertainty sell off’ is concerned, we have been witnessing it for almost last 5-6 months, which has digested; at least the initial panic orinigated by them factors.

Amid all these and the sideways or what we call a languishing market; the Chinese mainland market has corrected below 3000 mark which it was trying to hold on since many years. The present bear market which has been persisting since almost last 6 months, which had its roots in Trump Tariff Tantrum; is expected to continue in the second half of the calendar year 2018 as well. It is however noticeworthy and a sigh of relief for the investors that the Dow Jones (benchmark index of USA stock markets) has maintained its critical 200 DMA thrice after that. However, the other important indicators still signs towards vulnerabilities in the technical chart set up. Our research suggests that any strong upmove is not going to happen in near term in this global trend setting equity indice and this 9^th year since bull market began is going to be a year of profit booking and uncertainty which is likely to be followed by the global counter parts, be it the developed ones of the EMs like India.  We also believe that the present non-stop upmove rally in USA markets is due to mainly factors such as 1). The very low base of 2008 crash 2). The liquidity flood post USA financial crisis provided by the developed central banks 3). The improving macro economic data in USA and Europe 4). The election of Trump government which promised and implementing as well upon its corporate tax cuts, and ‘america first’ economic agendas.

We believe that the rally is taking a breather this year. The stocks rally in Europe could be backed by its own strength of macro and micro economic indicators. While the Asian economies, as usual and as always, continue to remain non-trending and non-decisive in whole global ball game of equity markets and vulnerable as they were to foreign funds flow, of which India has seen as much as USD 1 billion and USD  6 billion in debt markets, the highest in first half of any years in a decade. This clearly says something about the world markets changing trends and global investors’ changing portfolio settings.

We, however believed that there has to be a small cap and mid cap as well as large cap stock technical bounce back rally, of which some already started in last week trade. We believe this should be taken as an opportunity for longer term investors to invest in cement, entertainment, oil gas, real estate and some select stocks as they are available at cheap valuations.

Indian economy is just coming out of two huge economic disruptive events of note ban and GST while the LTCG also impacted and continue to impact the investments fraternity’s decision making esp.the FPI ones.

We think that the Indian markets would continue to languish around the present life time highs of NIFTY 11000 and SENSEX 36500 during the time until Mr. Modi is likely re-elected as PM. We have seen many jokes doing rounds in social networking that NIFTY is at 10800 but the portfolio of investors looks like NFTY of 8000. This has happened due to the sell off in mid cap and small caps while few large caps like HDFC, RIL, Maruti etc. continued to drive the benchmark indices up or at least maintained it near the life highs. So, this irony would continue to remain, and that is why we always suggest the lay investors to take advice of professional experienced investment advisory for their ventures into stock investing and trading.

The given views are subject to change d
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