Thought for the day
"I do not know what I may appear to the world, but to myself I seem to have been only like a boy playing on the seashore, and diverting myself in now and then finding a smoother pebble or a prettier shell than ordinary, whilst the great ocean of truth lay all undiscovered before me."
- Isaac Newton(English, 1642-1727)
Word for the day
Culturati (n)
People deeply interested in cultural and artistic matters.
(Source: Dictionary.com)
Malice towards none
Mother Nature for sure is extremely annoyed.
Does someone has a plan to pacify Her?
Not worried as yet
The Indian benchmark indices have corrected 10% from the all
time high level recorded last month. Broader markets have also witnessed
similar erosion in stock prices. As of yesterday, the YTD net return for 2015
is marginally negative.
In strict technical terms, Nifty has ended the yesterday trading
session at lowest level since 07 January 2015. A monthly close around this
level would mean lowest monthly closing since September 2014. It would also
confirm a lower high lower low pattern that is considered bearish by trend
followers.
Nifty peaked on closing basis at 8834 (13 April 2015), 2% below
its all time closing high of 8996 (03 March 2015). I was anticipating (see
here) this as an alternative likely scenario. But it has happened 3-4 weeks
earlier than I had expected. It has also undershot the downside target of 8350
(set at 7% correction from the peak) and may perhaps complete the full
correction of 10% (8096).
However, the current fall being broad based, sharp and normal
(upto 10%) is not worrying from midterm perspective. It would still be normal
if it corrects couple of percentage points further down. I see this as the likely
scenario.
However, a close below 7860 on Nifty would rattle a lot of
nerves, as it would open the probability of full 20% correction and end of bull
cycle that commenced on 30 May 2014 from 7230 level. I see this as least likely
scenario.
On the other hand the recovery from sub 8000 level will be slow
and led by a small number of frontline stocks. In my view, a materially large
number of mid and small cap stocks would be left out in recovery, to the dismay
of many traders and investors.
In my view, the expensive cyclical will also seriously
disappoint investors in next six months. Though the quality defensives, though
terribly expensive will hold the ground till definite signs of a cyclical
recovery show up in the corporate numbers.
The strategy would therefore still be (a) to hold the quality
and buy selective cyclical post correction; (b) avoid small and midcaps.
Interesting reads:
Trivia
PM Modi and his government got well deserved Kudos from across
the world for his swift and adequate response to the geopolitical crisis in
Yemen and natural calamity in Nepal.
The disaster relief mechanism that was severely criticized for
poor handling of Uttrakhand floods in 2013, is now sought after many advanced
countries.
I heard that nothing material has changed in the NDRF per se
since 2013. It is only that PM himself is giving priority to disaster relief
and taking responsibility for the management.
I hope that similar results would be seen soon in other projects
where PMO has taken the lead!
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