Wednesday, February 28, 2018

Modinomics V2 and Market Perspectives - Part 1

Hello friends
The last couple of months have seen sharp moves in either direction. Here are some of my preliminary observations with Nifty vis a vis Modinomics and Nifty vis a vis global markets

Outlook vis a vis Modinomics
Let us recap to the time in 2013 when Nifty made a high of 6415, corrected downwards to 5120 and bounced back; I presume the same pattern will repeat itself. My humble opinion - buy the dips as far as equity investments are concerned. My preferred bets are

Nifty Bees, Bank Bees, Junior Bees, PSU Bank Bees
[Disclosure I have holdings in these scrips and have recommended the same to my friends and family]

You can check my previous post where I have highlighted some stocks that than beat the average market returns. All investments must be made with an SIP mode.

Expected Path: Peak in the 10700 zone followed by a correction to 9600 with interim peaks, troughs and sideways market conditions.

As far as A Group Stocks and Indices are concerned, I follow the advice of Nadeem Walayat - "Greater the downward deviation  from peaks, greater the incentive to buy

Political factors that will trigger trending moves on Nifty
Based on current outlook, it seems near certain that Modi will be back as PM again with a 300+ majority in the NDA alliance. Some of the states with impending elections will trigger short term spikes or falls in the market. From a Union Budget perspective, though the markets did not cheer the same but that is always expected when a party is going into the election phase. The budgets will be populist as the rural votes create the votebanks. My view is that as far as educated youth are concerned, they have understood the concept of JAM (JanDhan-Aadhar-Mobile) measures.
The negative response to LTCG was not expected. Mr Jaitley has this knack for not clearly speeling out the the plans and getting smooth implementation. Happened with Demonetization and deja vu for GST.

The steps towards digitizing the economy have shown good progress and the next steps seem encouraging. GST implementation and roll-outs have not been as streamlined but these are initial steps to the larger benefits.c[ So my vote is disclosed heads up!!]

To summarize, as far as stock investments are concerned, I'm in favor of "Buy The Dips" with NDA 2 as the winner.

From a global market perspective, Dow was also overbought and is now in a corrective mode. My take is that it is in the last phase of correction. Accoring to my analysis, it will form a base around 24000 levels and resume uptrends. This analysis when juxtaposed with my Modinomics analysis, comes pretty much in line with anticipated price moves.

Commodity Markets: In dollar terms, prices have come to the USD 65 dollars / barrel mark. If we analyse WTI Crude prices, the pivot point is USD 65 dollars a barrel. Though manias can take prices anywhere between 25 dollars and 100 dollars.

Gold will confirm its uptrend with 2 consectutive closes above USD 1400 per ounce for targets 1550-1600

Currency : I expect the rupee to be in the range of 63-66 vs dollar this year.

To wrap up up part 1 of this series, I sign off. The next part will be more illustrative with analytic graphs and tables to support my forecasts and better outcomes of the forecast. Stay tuned to my updates [Always free with disclosures on personal holdings]


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