Recently had written a few articles focusing on Nifty from different angles like technicals , p-e , Global Indices etc.
I have consolidated the same into an e-book.
Nifty Kya Lagta Hai - nooreshtech.co.in.pdf
A quick follow up on Nifty
Nifty Technical View
- For the last 12-13 months Nifty has been in a downward channel. The recent lows at 6825-6870 were very close to the channel. ( did break it by a small margin.)
- In the near term we have crossed a recent top at 7600 which is a first indication of an extreme short term trend change.
- Channel resistance at 7800-7850.
- Another couple of tops at 7950-7970.
- The above zones could be a good area to book partial profits to increase some cash.
- The next question is can we breakout above the channel ? Lets look at the breakout which happened in 2012.
- In 2012 we saw a further dash above the channel. Its tough to say whether it was a Bull Trap or Short Covering but did confirm a major bottom in place.
In that sense if shorting stops should be placed at 7970 the previous top and hence a risk-reward short entry can come in if we see Nifty rallying a little more. Will review the stance if we reach the zone of 7800-7850.
IIF Meet Video
I had recently given a small talk in the IIF google group meet in Delhi on 13th February 2016.
Nifty had hit a low of 6870 on Friday February 12th 2016 so it was some lucky timing to come up with the presentation title to be - Beg Borrow Steal and Invest.
Its a small talk of 35 mins and i got hold of the recording in this week so just sharing it. Most of the charts used in the presentation are from the blog.
TRAINING SCHEDULE FOR APRIL
Registration Fees = Rs 2000 for Technical Analysis and Rs 3000 Investing Lab ( Refundable )
This is how much you can pay
1) Ask for registration fees to be refunded if you do not like the course.
2) Pay anything above Rs 2000.
(You can pay in chq/neft/online/gift/blessings at the venue or anytime after the course. There is no upper limit to the payment
)
Entries on a first come first save basis. Batch size 5-25 participants.
No Conditions apply. You can also directly come at the venue and register.
The Investing Lab – April 23-24th Mumbai. Pay as much as you want !! Register @Rs 3000
March 30, 2016
Just watched your video Nooresh. I like your optimism which is a pre-requisite for any one investing in Indian market.
However, You yourself mentioned 40%+ correction from TOP happened in BSE Sensex in 1992, 2000 and 2008 but may not happen in 2016 due to composition of Nifty. This is like saying “This time is different” which actually is never different. BSE composition has been changing since long. Company like Zenith Ltd was part of Sensex till 1992 or say Hind Motors was till 1996.
Before we see big bull market like 2003-2008 we may see very difficult period where every big/small investor may throw in towel.
March 30, 2016
Hi Jigs,
I have mentioned its 60% and not 40% from top. You may also go through in details from previous posts comparing cycles.
If you go through the video and notice that in 1992/2000/2008 we had a few sectors which led the markets and became a big part of Sensex. ie Cements / IT and Real Estate. Also these sector stocks went up 10-50 times. If you could let me know of a few stocks which have gone up 10-50 times since 2007 and have become a big part of Sensex/Nifty.
A lot of old adages like this time is different matter when a good time has come. Doubt we have seen good times for Nifty stocks in last 5-8 years majority of them have not even beaten fixed deposit returns.
A question to you do you expect a 60% drop from peak ? If yes how much cash as a % of portfolio are you holding ?
March 31, 2016
You have seen what is happening in Pharma sector. I feel we have not seen full damage yet. Same thing for Banks including PVT Banks. Remember Banks have highest weight. Its wrong to believe just because high ROE stock or new favorite sector (Consumer/Pvt Banks/Pharma) is in Index will make sure Index do not fall. They fall more than other Index stocks. Infosys/NIIT fell more than other Sensex constituents in 2000-2001. Unitech was part of Nifty once and that time Property was darling sector like current theme (Consumer/Pvt Banks and Pharma).
Index has not given any return since 2008 because equity returns are non-linear. From Apr 1992 to Apr 2003 Sensex went nowhere and then it was up almost 7 times in next 4-4.5 years. I strongly believe history will repeat this time as well (So many pessimists do not believe this) BUT before Index go up 6-7 times have we seen panic like Sep 2001? Not at all, I see so many people talking about next multibaggers which suggest lot of hope among investor community. 99% of investors should just stop talking about Market that is what I call panic/dismay. I could be horribly wrong but I do believe Nifty can touch 5100-5300 levels (2013 lows) that too sometime in 2016.
I am 100% invested but I will hedge with Nifty PUTs.
March 31, 2016
Hi Jigs,
Have u looked into the Free-Float Market Cap methodology ? You would know why Unitech was part of it and above HDFC Bank 🙂
Pharma and Consumer are still a small part of the index. The private banks are the ones which can make damage as PSU have already become only 2-3% of Nifty.
At one point you mention about 1992-2003 and in the next point forget the IT run of 1999-2000 where SSI went up 50 times or many unkown IT names went up 50-100 times. Did we see that happening in 2014 where some sector went up 10 times and 3-4 stocks coming in the index.
Also why do you expect a move like 2003-2007 again ? Over expectation. If 2008 was one big event then even 2003-2007 was so i do not expect a 7x move in Sensex in 3-4 years any time in next decade but a more slower move comparatively.
Most of my views have backing with data and observations pointing towards the conclusion and ready to accept when i go wrong and take action. So if Nifty were to breakdown below 6400-6800 i am ready to go on cash or short.
In your case it seems a strong belief in the hypothesis but at the same time being 100% invested is a total contrast. Hedging with puts implies you will only recover some part of the drawdown. Also if Nifty does not fall sharply you might lose some of the hedging cost.
So if you are hedging with Nifty what is the cost of Hedge ? Say for 100 rs invested how much would you lose on ur hedge.
March 31, 2016
Very good reasons Nooresh.
Study all BSE index changes from day 1 and you will realise its NOT about Free-Float Market Cap methodology its about some sectors doing well in given business cycle. When Inflation is low (2003-2007) Property will do well. Similarly when Inflation is high (2012-2015 period) Pharma/Consumer sectors do well and so on.
IT run was similar to one in 100 years bubble similar to South Sea Bubble and Railway Mania. Some companies like yahoo was at 600+ PE. It will never come for next 50-100 years so if you use that as benchmark you won’t get right picture anytime in near future.
Also remember that cyclical sector can go up 50-60 times from bottom only to fall 85-90% once cycle ends. FMCG/Pharma/PVT Banks can NOT go up that much but lot of them can easily fall 40-50% from TOP that is why I said 5300-5500 Nifty is Not impossible.
I invest 90% of my portfolio in 4-5 stocks max and they being smallcaps/midcaps I know that I won’t be able to sell them when I feel Nifty may fall.
My hedging strategy would be BUY Nifty PUT every month from May 2016 for an amount equal to 1% of my portfolio.
March 31, 2016
Hi,
Have you done a study from Day 1 then would love the data. I like to see data / charts rather then beliefs/hypothesis.
Earlier we have fallen 60% from top then why only 40% this time ?
Your hedging cost is 1% per month ?
Also would love to know those 4-5 stocks – nooreshtech@analyseindia.com