Indian Premier League is the most trending topic, as of now,
for discussion all over the social networking sites as well as social
gatherings. Interesting to note that even stock market traders are talking
about them but for them IPL is “Index Premier League”. Almost every day (for
investors every month), they try to find which sector index is out performing
NIFTY and they try to bet on the best stock from that index.
Looking at the NIFTY’s track since my last month issue’s
article for “V-share” magazine, it has been a dream run for the stock market. I
had mentioned that India was struggling with politically instability but within
that a turnaround in the form of lowered inflation and better IIP numbers
brought some life to bulls. Banking sector analysts expecting a rate in next
month’s bank policy as inflation has cooled off. Policy was to be announced on
3rd May but financial sector has already shown their interest or
biasness towards the possible rate cut. On 13th april I did posted
on my blog that banking sector will lead nifty and we noticed that it
outperformed it with a return of 9.9% while NIFTY has returned 6.2% over the
same period. This was surely in
anticipation for the rate cut but now markets need some other reason to move
on.
Since expiry yesterday we saw some profit booking in banking
stocks and nifty dropped down today with sweeping 44 points. Earnings season
has started and many frontline scripts have announced their result but IT has
been disappointing street. Last decade i.e., 2000-2010 was IT boom for the
markets but I feel next decade it going to be banking decade for Indian market
upto 2020. Reason?? We have seen that Internet or computers have reached almost
each state and to be specific even few villages but Banks?? Yet to be reached
villages. Private sector banks have started entering villages and that will be
reflected on their balance sheets in coming years. 70% of the GDP constitutes
of Agri products and we have seen government announcing subsides to farmers.
But now recently they have agreed for special “Kishan Credit Card”, loans etc
which all will be credited directly to end user i.e, farmers bank account. So
primary need for all farmers is to have bank account and for this we need banks
in villages. With this facility farmer would avail many other banking
facilities which would benefit them as well as Banks balance sheet. For this
simple economic reason I feel next decade is going to be banking
dominated.
Now as per Elliot wave bank nifty has a long term target of
21000 with leading private sector banks such as ICICI bank, Axis bank and HDFC
bank, while on small banks we can bet on DENA Bank. Last time I mentioned that
nifty was in no trade zone from 5400-5630 and bullish above 5630-5850. We have
seen some strong bottoming out around 5600 and I hope traders and investor were
long over that level. Herewith the attach graph is Nifty’s month chart and we
could notice that it has strongly shown characteristics of perfect Elliot wave.
In technical terms we are in 5th Wave of the larger third wave of
the super 3rd wave of Grand 3rd wave. I know terms are
lil tricky but to say in simple terms we still are in secular bull market.
Every dip is a buy for long term
Strategy on NIFTY: Nifty could see some profit booking now
upto 5773 and max upto 5610 but take this as a buying opportunity rather than
to short for those who missed it. I expect markets to say consolidated above
5770 but 5610-5655 should be respected. So buy on each dip before 3rd
may with short term targets of 6045/6150 on nifty with a medium term target of
6500.
Note:
All the data and graph is as of 26th April 2013 closing
Disclaimer:
I may have personal position in index and above mentioned stocks. Views and
News mentioned above may have Errors and omissions. My views are biased more
towards technical analysis. Please read and study the market carefully before
investing on my idea. For any suggestion contact me on my email. Some words
mentioned in article don’t mean their actual meaning. They are correlated for
market.
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