Friday, May 16, 2014

Nifty Election Outcome - Compare with Prediction 2014

Well well well - the big day has arrived and Nifty is almost there at 7500 levels. In the Outlook for May itself I had given a BankNifty estimate of 14500 and we are well past below that. I mentioned PSU banks outpacing over Private Banks in May and that too has happened.

Let us review my investment picks given over the last 6 - 8 months

SBI: Accumulate below 1850 all the way to 1450.
Avg Investment Price = 1650; LTP is 2485 Gain: 50% ROI in 8 months

Larsen: Accumulate below 900 For 1450 target.
Avg Investment Price = 725; LTP is 1445 Gain: 99%

Tata Steel: Accumulate in 240-270 Range; Target 425+
Avg Investment Price: 225; LTP 480 ROI 210%

Yes Bank: Accumulate below 300 all the way to 240
Avg Investment Price: 295; LTP 581 ROI 97%

NiftyBees: Buy below 580 levels relentlessly
Avg Investment Price: 600; LTP 750 ROI 25%

BankBees: Buy below 1000 levels relentlessly
Avg Investment Price: 900; LTP 1550 ROI 72%

Bottom-Line: Buy when the market is fearful and there is no need to buy too many stocks. The only buy call that failed was JP Associates. Also there have been some personal picks and trades that did not pan out on expected lines.

I am still seeing a lot of buy calls coming through and targets of 8000, 9000, 10000 being spoken about on Nifty. I reiterate my stance: Anything beyond 7500 is a bonus. DO NOT BUY NOW; THIS IS TIME to BOOK PROFITS.

That does not mean you liquidate all your holdings. But as far as the India story is concerned, almost all positives are being priced in. Euphoria may take the markets another 10% to 20% higher but this is time to start cutting long positions. Book those gains and start looking at the next leg of gains.

What we are seeing now is the repeat of 2008, 2010 etc. The buy calls come towards the end of the rally and thats why retail investors lose money [because they buy at potential tops]

If you look at the fundamental story, nothing has changed over the last 12 months. This rally is fuelled by optimism and euphoria and that will die down soon. Last but not the least, don't short this market. But certainly don't buy in. Looking at the way the Rupee-Dollar is moving and assuming that Bond Yields will soften, there is more money to be made in Debt Instruments, Gold Silver now.

The buying time for equities went away long ago. With a stronger rupee, gold and silver will correct in Rupee terms further. Rupee-Dollar should move towards the 54-55 mark by end-June when the budget comes through. Should that happen, the next significant return yielding instrument will be the gilts.

Every 1 rupee appreciation in Rupee-Dollar exchange rate, the gilt instruments appreciate 5% to 7%

To summarize, enjoy the bull run till it lasts but don't rush to buy in now. Keep raising your stop losses. The way things are poised, the euphoria may bring more gains but that is not a sustainable rally. Please do take moment to review the election updates that were shared here as well over the last 6 months.

'Jaanoge toh maanohe' - Jai Hind

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