Outlook For October 2013

So, some excitement did come through after 22nd September, Fall Equinox. The German election result as of now seems a non-event. I have made one update and when I discuss Global Markets, will cover them more later in this post.

Coming to Nifty and BankNifty, let us first review the charts

Critical Levels as follows

As long as Weekly prices are above 5740, bulls can spring a surprise.
The most important level to watch out for is 5803 [+/- 15 points] on EOD 30th September. Holding 5803, the bearish possibility on Nifty gets delayed further. To call a 'Bull Market Breakout', 2 consecutive closes above 6280 are needed.

As I keep saying every month, so far we have never had a 'secular bull market' in India with Rollar above 48.25. Also Nifty so far has a jinx that when it opens in January above 6000 levels, it tanks to lows in the Oct-Dec period of that year (2008, 2011). Whenever we have had Nifty options in steps of 50, it has done badly for that year (2008).

The overall bearish conditions are satisfied but as my shorts in Sep got stopped out at 5740, I would not encourage fresh shorting till 5740 is breached on downside (Once bitten, twice shy). Many a time, people think that Not Bearish = Bullish and Not Bullish = Bearish as far as my outlook is concerned. I don't know about others but as far as Im concerned, my outlook goes Bullish - Neutral - Bearish - Neutral - Bullish. The 2nd part one has to bear in mind is the timeframe. As all seniors in the market will advocate, the higher timeframe view has more prominence than the lower timeframe view. The way prices are poised right now, this is my outlook

Daily Timeframe: Bullish till EOD > 5810 [This is to decide on taking a position for the next day]

Weekly Timeframe: Bullish till EOW > 5740 [This is decide a positional trade with 8-10 day horizon and reviewed every Friday]

Monthly Timeframe: Bearish till EOM < 5803 [This is to decide a positional trade with 4 weeks to 6 weeks horizon and reviewed on the last trading day of each calendar month, not expiry!]

To summarize, I could be bearish on daily basis but bullish on weekly basis and super-bearish on monthly basis. And not just me, any person with reasonable analytical skills will say the same. And also the fact that we have to be nimble footed and adhere to our SLs should the trade go against us and wait for the next signal to come. ('Itching' to take a position is trading suicide; discipline and patience is the key)

The levels are clear - so let us wait for Nifty to give the signal on 30th Sep '13. The preferred Bearish Count is still alive and I acknowledged missing out one crucial part in the EW analysis. The previous fall to 5118 was a 3 wave fall and hence a deep retracement was highly plausible. As long as prices are below 6225, the preferred bearish count is alive. Above 6225, that count goes out of the window for sure. The preferred alt 1 is already negated.

So there are only 2 plausible counts remaining

Bearish: 1 leg of fall pending on Nifty [1000+ points odd from CMP]
Alert Signal for INVALIDATION: Prices going above 6225
COMPLETE INVALIDATION: 2 consecutive closes above 6280

Bullish: Correction done at 5118 and new bull market has started
Alert Signal for INVALIDATION: Prices going below 5408
COMPLETE INVALIDATION: 2 consecutive closes below 5280

As I have also been mentioning regardless of where Nifty goes this year, next year is expected to be super-bullish after elections. So falls in 2013 must be used for accumulation. Preferred picks are NiftyBees, BankBees from the index based units; LT, SBIN, ITC, Tata Steel from the core index counters [Levels have already been given in previous posts] The index linked units ensure natural diversification of portfolio.
(Disclosure: Barring ITC and Tata Steel, I have long positions myself in other counters)

As of now Im Long Equities - Nil FnO. Long/Short FnO positions to be created after break-out / break-down signals emerge and will be updated on Twitter @NiftyParadox (Top left side of the blog)

Why things look super-bullish for India in 2014

Post-election results, most often than not have resulted in euphoria as the new government tries to scale down barriers for businesses and boost the economy. On a social mood phenomenon, India is at the cusp of an economic revolution just like the US was in 1980 [the roaring 80s as they called it]

During that time, the bond markets opened up big time, equities were soaring, the Dow made record highs. From a social mood perspective, the Billboard Chart Boards came up, more people started enjoying jazz, operas etc and the media space boomed. Fashion took new contours and there was a remarkable wave of freshness, cookery shows came up etc etc etc. Now just take a step back and see what is happening in India. Masterchef has gained importance, food is being looked upon as a lucrative business option, the colors in media be it films or television are all picking steam. Music has so many avenues and we have our own versions of Indian Idol, Sa Re Ga Ma etc etc etc. India's Best Dramebaaz, Dance India etc have gained significant momentum. Alternative cinemas are being embraced upon, people are becoming more fashion conscious and willing to experiment. People have become more open as far as relationships are concerned.

Social media has exploded and politicians are getting good stick for their foot in mouth diseases and customers are very punishing towards bad service be it from public sector or private sector. In Mumbai, open up the Mumbai Mirror and there are so many plays that are being patronized. 10 years ago, even a renowned theatre like Prithvi had to struggle to ensure adequate audience for plays. Only Gujarati plays, that too from a select audience used to get adequate patrons. Now, patronizing plays, music concerts is no big deal. More and more people are embracing them and these social indicators are very powerful signals. This India is changing for the better in many ways [and for the worse in many ways]

So the way I personally look at it, what US, UK witnessed in the roaring 80s, India will start witnessing post-election 2014. Also note the emphasis on 1980; [2014 = 1980 + 34; 34 is a Fibonacci Number] With so many different forms of analyses leading towards 2014, Im super-bullish as far as 2014 is concerned, post-elections of course. The downside of that is hyper-inflation and don't read too much into what Raghuram Rajan is doing now. He is carefully preparing his ground for Desi QE post-elections 2014.

Global Markets:

US: Don't read too much into the fiscal deficit debate in the senate. The US knows only one thing that is QE. They will continue to spend, continue to raise the debt ceiling and continue QE for as long as possible and as high a quantum as possible - period. They are now waiting to see the next Euro policy. Should the Euro-bailout move out, forget QE tapering, they will increase QE. Same is the case with the debt ceiling. If the debt ceiling is raised, then forget QE tapering, more QE will follow!
Republicans are fighting Democrats but remember which party created the Housing Mortgage Credit Crisis?
George Bush Jr + Allan Greenspan

The 2nd term of a US President has almost always been a disaster.

Germany: Merkel's key ally for Euro-bailouts has been ousted. The SPD whilst not anti-bailouts, is not pro-bailouts either. They want benefits of Euro bailouts to benefit common German people. This is a real problem in Germany because although the DAX is roaring, Germany's pro-Euro policy has helped German businesses and politicians. The common man is still struggling. Don't read too much into the fact that Merkel is coming back to power and she says that her Euro policy will continue as usual. With the new coalation partner and more resistance from Finland, Germany will pull the plug sooner than later on Euro-bailouts. The political landscape in Germany has changed drastically. We will see the results of the same in the next 6 weeks or so. The 3rd term for a German Chancellor has always been a disaster.

UK: Everybody is worried about the housing market bubble as jobs have not picked up. This entirely is the result of BoE 'Funding For Lending' QE policy. They have elections lined up in end 2014 or early 2015. So the bubble will continue but stocks will be under pressure as we run up close to the elections. (And remember that these are not new housing starts but erstwhile distressed properties that are being acquired)

Gold / Silver: They seem to have found their bottoms in dollar terms and will eventually turn up generating about 10% returns per annum

Crude: One fall towards USD 65-70 per barrel pending but prices will hover around the USD 100 per barrel mark with so much of QE happening all over.

Just a last note on Nifty; just as it happened in 2009, it will ignore bad news from the West and continue to soar higher. Expecting bumper new highs by Diwali 2014 on Sensex, Nifty, Gold, Silver et al

Yours Sincerely...........................Short-Term Bearish Long-Term Bullish Indian Analyst

Market Updates Post-German Elections / Opportunities for Nifty Traders

So as of the latest count, Angie Merkel and her party won the clear majority as of last count last night. The downside is that the current coalition has gone for a toss and a new one has to come into play. It will be a good 8 weeks before the final government and manifestos are in place. First of all, let us look at some of the basics

European political history suggests that only few leaders so far in major economies have got a 3rd term in office over the last few decades. Margaret Thatcher from the UK, Konrad Adenauer and Helmut Kohl from Germany have had the honors. History suggests that the last terms for all these leaders have been chequered. [And same has been the case for US Presidents in their 2nd terms]

The Euro has shot up marginally post the event and was one of the largest gainers after US Fed announced the holding back of tapering for the time being. 

Markets are so far celebrating the 3rd term of Merkel in anticipation that her aim of keeping the Euro intact will continue. What a vast majority of people have not factored is that fact that although Merkel has been talking about saving the currency, her underlying aim is to save Germany. By helping out PIIGS, Merkel has ensured near-zero borrowing costs for Germany and the DAX has been roaring because Merkel has ensured that a large part of the bail-out money is funneled back into the German economy. This is hardly surprising because Germany is highly dependent on exports be it international or intra-Europe.

What a lot of people are lot factoring in is the fragile condition of European economy as a whole. We know where the PIIGS stand. UK, barring the housing bubble and a few tech start-ups has not been able to revive the job market. It is instead busy creating the next sub-prime housing bubble [and the process has just started. Will take at least 3 more years for this bubble to burst]
The Danish economy has gone for a tailspin with average debt levels at over 350% of an individual's networth. The housing market is deep under-water and the government has had to overhaul the mortgage system to an 'interest-only' mechanism until further signs of improvising [another indirect QE and ensuring that people are under debt]

To summarize the situation in Europe, the risk that an immediate threat of some form of Euro-zone exit [either by Germany or by booting out some member] is averted for now. Bulls will be happy with that. Turbulence will continue for another 10-12 weeks. IMHO, there are some major surprises from Europe still pending and in all likelihood will still end up coming from Germany or Finland over the next few weeks!

On the other hand, the annual drama about fiscal debt and the debt ceiling started again in the US. Obamacare is being pushed back and the Republicans are trying hard to scuttle the Democrats' path of QE forever. Even that is an anti-incumbency sham because the Republicans also engaged in similar tactics. The turbulence on a day to day scale may seem funny but the bottom-line is that US is credit-addicted so no change expected from there.

How does all this pan out for India? With high dependence on FII inflows, Nifty tends to react almost everyday with either a boom phase or an absolute gloom face. The next 3 days of price action can almost entirely be ignored due to expiry week. However, I must caution the bears about Nifty closing above 6225 and more importantly above 6280. These are 2 very crucial levels and hence I have been reiterating that one should not jump to shorts till a firm close below 5740 is in place. Whilst on the upside if those 2 crucial levels are taken out, bulls will be on more rampage.

To recap on my earlier outlook I had given 3 levels on various time frames

EOD > 5445 is bullish and only a close below 5348 can signal reversal. This was the beginning of September and was taken out with conviction. Now that level has come down to 5944 on the daily time frame [Right now daily bias is bullish]

EOW < 5740 is bearish and a close above that will turn weekly signal to bullish. This has happened in the last 2 weeks and on a weekly time frame, this level stays intact. As long is Nifty is above 5740 on the weekly time frame, it is advantage bulls - period

EOM < 5803 is bearish and a close above that will turn monthly signal to bullish. This is the crucial level we have to look at when we evaluate closing price of 30th September 2013. The higher time frames have greater weightage and they tend to assert themselves unless the contrary price and volume action is strong.

On the EW front, my preferred count was looking at upside capped at abut 5944 levels and that went for a toss. I consulted a couple of experts on EW as to where my analysis went wrong and I got the answer from an expert master of EW in a precise concise manner. When the fall is a 3 wave fall, the subsequent rise is very steep. My mistake was that I was expecting an exact replica of Nov '10 to Dec '11 fall. Hence I expected a lower top on every rally. With this 'bias' I missed out on the crucial alternation rule of 3 wave fall-5 wave rise with deep retracements. Hence the emphasis now comes to 6225 and should that be taken out on closing basis [and more importantly 6280] then it is advantage bulls all the way.

I have always been an advocate of learning where analysis went wrong and also acknowledging my mistakes with the reasons and price levels. I was looking at shorting the rallies in Sep '13 with SL at 5740 and got stopped out [the twitter updates confirmed that as soon as it happened] Now people 'itching' to short still need to wait for prices to close below 5740 before initiating fresh shorts.

The critical Gann dates almost always bring large price swings in the 2 weeks around those dates. Yesterday was Fall Equinox. So lots of volatile price action expected in either direction. In fact these are good times from a trading perspective. It would be very prudent right now to build the following straddles

Oct 6200 Call with Oct 5800 Puts [or Nov 6300 Call with Nov 5700 Put] in ratio 1:1. Target exit points are +250 points from CMP or -250 points from CMP that will ensure that the gains remain 50 points per lot on the entire spread. SL would be when the combined premiums fall below 50% of premiums paid. Time frame: 8 to 10 trading sessions.

Uni-lateral positions [i.e. only long or only short] should be taken only after prices take out crucial levels. Closing above 6225, longs have higher risk reward outlook. Closing below 5740, shorts have higher risk reward outlook. Enjoy the volatility first on account of Nifty expiry and then on account of post-equinox effects!

RBI Meet on 20th September - What To Expect - Desi QE Episode 1

So Uncle Ben decided to leave the QE untouched for now. Not the unexpected as I had warned in my outlook earlier this month i.e. US will continue with QE for as long as possible - period. Whilst many may argue for / against etc etc - markets have their own ways to make out what they want.

In a knee-jerk reaction, we may have global indices, commodities going on a roll leaving bears puzzled. As far as Nifty is concerned, the technicals remain unchanged as far as fundamentals are concerned, it is a different story all together.

Desi QE specialist, Raghuram Rajan holds his 1st RBI conference on 20th September and let us analyze what to expect. His debut was celebrated in style and his bold initiatives cheered. Inflation has shot up big time though currency stabilized by about 350 basis points. Now comes the Catch 22 situation from an Indian perspective.

Whilst the growth story demands that rates be cut, the latest developments make that a difficult option to take. Let us not forget that this meet is not just about interest rate decisions and CRR decisions but also about the guidance for the RBI. With new banking licenses set to be doled out and forex risks to be mitigated, the mainstream press and punters will be waiting with baited breath to take on senor Raghuram

Interest Rates: A rate cut is highly unlikely given the inflationary outlook and global liquidity. Thanks to US Fed, for now that part can wait

CRR: Expect a 25 basis points to 50 basis points cut in CRR to indirectly inject some liquidity

Currency Swaps: It will be interesting to see what is the guidance on this front. So far RBI has only announced swap measures with regards to USD-INR flows for the banks and OMCs. Luckily, Japan voluntarily came in and tripled the INR-JPY swap window to the tune of USD 50 billion equivalent this month (Point to note: Japan took lead in this step and not India!)

To save the rupee along with other EM currencies, it is very critical to have more partners on board for similar currency swap windows. With the recently concluded G-20 summit and BRICS discussion, it is very critical that at least with major trade partners like China, Thailand, Malaysia, Indonesia, South Africa, Russia etc to have INR-XYZ currency swaps that will be win-win situations on both sides. Unfortunately, it is highly unlikely as our central bankers seem to be happy with the fact that Iran accepts INR payments.

Moreover, politicians' vested interests lie in as many dollar transactions as possible!

Banking Licenses: This is one of the most absurd decisions seen ever. Rather than recapitalizing existing banks and moving towards consolidation (that will reduce a lot of fixed expenses and bring economies of scale) new banking licenses seem to be the flavor of the season.

Forward Guidance: Will be hawkish short-term and dovish long-term

As of now, the markets seem to have priced in a rate cut, CRR cut of about 50 bps. No QE tapering for now will keep rupee stable. So the upside on BankNifty maybe capped around the 10800-11000 mark.

3 major events were expected to rock the markets this week
1. US Fed Meeting: Uncle Ben gave markets reasons to celebrate
2. RBI Meet: Raghuram maybe hawkish and still get away with it for now
3. German Elections: Time will tell and as I have been repeatedly saying, this will be a potential game changer for global markets.

An interesting pair trade prior to RBI meet
Build a BankNifty Straddle with Oct 11200 Call and Oct 10200 Put with a combined cost of entry of about 250 per lot. Target Exit Points are 11000 or 10400 where in the pair will almost double. Keep a Stop Loss of 125 on combined value of the put and call.

Premium Invested: Apprx 250 x 25 = 6250
Maximum Loss: 125 x 25 = 3125
Potential Gain: 250 x 25 = 6250

Enjoy the new Desi QE version Episode 1

Olympics 2020 in Tokyo - What a Shame

So we had 3 final contenders for the 2020 Olympics i.e. Turkey, Japan n Spain. End result was that Japan was chosen to be host. The decision to leave out Turkey is understandable - it is still an emerging nation and it won't be able to gear up to infrastructure requirements over the next 5 to 7 years - fair point.

What is incredible is that Japan was chosen over Spain and that is quite a disaster. There seems to be a marked pattern in the way venues are being chosen for such big ticket events. UK was chosen to host the previous round [because BoE keeps printing money] and now Japan [because BoJ has gotten aggressive with Abenomics] Even during the UK Olympics, one of the PIIGS would have been a good choice - it would help turn around at least 1 economy. However, UK prevailed. Lots of infrastructure developments done for the event and a few weeks later, most of these developments are biting the dust!

First of all, we need to understand the demographics and situation between Spain and Japan; Japan too is an economy struggling with stagflation but a large chunk of Japanese are senior citizens. Some of them are in such bad shape that they have to live in the outskirts of Tokyo in shady and dingy dormitories because there is both space crunch and high real estate cost in Tokyo. Japanese corporations have such high number of headcounts who are being stuffed into 'boring rooms' so that they eventually resign and leave.

On the other hand, Spain is a relatively younger economy with almost 25% of youth under the age of 25 unemployed. Spanish infrastructure is fantastic and they would rise to the occassion. The real estate prices in Spain have rationalized substantially and thus, this one single move of Spain hosting 2020 Olympics would have boosted Spanish economy. It would help Spain at least partially turn around the economy with minimal financial aid from ECB. A golden opportunity lost from Spain and Europe's perspective.

On the other hand, the highly inflated real estate prices in Japan will further fuel an asset bubble and most of the Japanese tax payers will further reel under pressure. BoJ will have to further print money to set the house in order and that IMHO is a criminal waste of economic resources.

As I said earlier, it is remarkably co-incidental that countries that are aggressively printing money are the ones that are getting access to such big ticket events [Brazil and Qatar also have big ticket events coming up. The property bubble in Brazil is already quite hot and once the FIFA and Olympics are done, they will be in bad shape as well; Qatar is on a set path to become the next Dubai but they have oil to bail them out]

To summarize, the world leaders are not in favour of economic prosperity of their citizens. All that they want to do is suck out the blood of tax payers and keep the rich where they are and keep the poor where they are. Japan Olympics 2020 will be short-term gain and long-term pain. Well done IOC!

Outlook For September 2013 (Revised Counts)

Very volatile month indeed; as mentioned earlier, the current correction is similar to the one we witnessed in Nov'10 to Dec'11 period. We all know how choppy the markets have been in recent times on intra-day basis; the same was the case in the earlier period as well. Now, it is even more pronounced by virtue of the fact that institutional traders are allowed algorithmic trading. Whilst such moves create lot of fluctuations in intra-day basis, on EOD/EOW/EOM basis, prices do rationalize.

We know where we are - we want to know where we are headed - but let us review Nifty / BankNifty Daily/Weekly Charts first

As I have been harping that current correction is similar to Nov'10 to Dec'11 moves; I had also mentioned in http://niftyparadox.blogspot.in/2013/08/why-many-ew-counts-go-wrong-in-india.html this post about the broad moves in 2010-11 period

[Thanks to a couple of queries on the blog and Twitter, I realized that the previous count is INVALID as it tantamounts to an Expanded Flat. The current correction is a Double Zig-Zag similar to the Nov'10 to Dec'11 correction]. And since this is a larger degree count, it must be rectified asap as erring on this has serious ramifications]

Now we have done the following moves (Revised)

Preferred Count
A: 6225-5566-6125-5477-5477-5118
B: 5118-5*** [Can go upto 5944]
C: Pending

Preferred Alt1
A: 6225-5566-6125-5477
B: 5477-6125-5532-6093
C: 6093-5118-In play

The preferred count suggests that 2 large moves are pending; one on the upside and then a very deep downside correction. [2 consecutive closes below 5280 can confirm this]

The alternate count suggests that the pending upside move will be shallow [5740-5810] and the ensuing downside will also be shallow [4911-5032] [shallow relative to 5118]

The last alternative suggests that the correction is completely done with and the next up move has begun [2 consecutive closes above 6280 can confirm this]

My personal probability assignments are as follows
Preferred Count: 60%
Preferred Alt1: 35%
Alternate: 5%

Regardless of which one comes true, one point is very clear; index linked ETFs, and index heavy weights like LT, SBIN, Axis Bank, ICICI Bank, ITC are moving towards accumulation bands. The last leg of correction will perhaps take them down to about 15% from recent lows. The maximum damage will now come from the IT pack which is excessively valued. Just a 5% to 10% correction there is enough to generate 20% damage to Nifty.

For Nifty trades, the following timeframe wise levels are intact

Daily - Bullish for 2nd Sep '13 with EOD > 5445. Only a close below 5348 will resume downtrend
Weekly - Bearish and only EOW>5740 will bring bullishness
Monthly - Bearish and only EOM>5803 will bring bullishness

How should one approach the markets from here
On the investment front, dips should be bought into with a 2-3 year horizon. I have been updating my picks when prices come to accumulation point. As usual, I prefer to keep maximum exposure to the index itself than individual stocks. With a 2-3 year time horizon and target gains of 25% PA, Im willing to take a 10% to 15% hit in my equities portfolio.

So personally Im Long Equities and Short FnO as on date.

On the trading front, the big picture has been presented above and I keep posting on Twitter regularly regarding key levels. Personally, Im bearish till EOD/EOW<5740 but will shift gears if that condition goes through. Im not playing for the upside but using current rallies to build shorts via Oct Puts. I will be exiting all my Puts once EOD/EOW>5740 happens

For secure bull markets in India, we need Rollar to be at sub-48.25 levels. Whilst the current levels of 66-68 are extremely disturbing, there is empirical evidence to suggest that history is repeating itself. If you pull out the data for the last 25-30 years, pre-election years have seen rupee crashing by as much as 20%-25% and then rationalizing after election results. I think the same will happen yet again. There is a lot of sectoral churning that is taking place which usually is an indication of bear market rallies.

Critical Dates in Sep: 22nd Sep '13 i.e. Fall Equinox The 3 days prior to this date and subsequent to this date will bring large swings and alert traders stand to gain a lot here. This date also coincides with the elections in Germany that will be the real game changer. The majority is looking at US Fed tapering and the war on Syria - my personal view is that when all are looking at the most obvious points and views start converging at those points, they don't turn out to be game changers. The shockers will always come from the most unexpected places.

Whatever US Fed does, it does to prop up the USD or specifically demand and circulation of dollars. Whether its QE, whether its war or an internal recession - doesn't matter. With crude prices knocking 110/120 to the barrel, US has achieved what it wanted to achieve. QE will keep going until people dump the dollar - period.

Other Updates:
Gold and Silver have in all likelihood found bottoms in Rupee terms. In dollar terms too, that may have already happened. Boiling crude is a serious issue and IMHO, one more leg of fall is pending.

Not sure whether Dow has topped out but it is approaching some critical points and a 10%-15% correction is not ruled out.

FTSE, DAX, Stoxx 50 have all got a good 20% correction pending

As Keynes kept saying, 'Markets are irrational to the extent you are solvent' In real life, it simply means that markets will keep doing their own things and we need to act when our target buying/selling points come through. It is perfectly okay to have a view but when prices confirm otherwise, we have to junk our personal views and follow what the ticker is showing. The worst thing a trader/investor can do is 'look for what suits his/her view'; a sure shot recipe for disaster.

Happy Investing and Trading; last week of September should be exciting and Im eagerly looking forward to it. We have a lot of festivities lined up in 2nd half of 2013 and I hope all of you enjoy the same.

Buy Zones For Longer Term Investments - Part 3

Doomsday pundits will keep spreading the word of panic in markets as institutions are selling capital market asets and taking 'flight to safety' towards dollars; the main commentary from most 'experts' on channels was book out and hold on to cash; the very people who found stocks and valuations 'attractive' at 6000 levels do not see value now and would like retail investors to hold on to cash.

Fact is that although some more corrections are expected in Nifty / BankNifty levels, some of the stocks are approaching critical buy zones. In my last post I had mentioned Larsen and SBI bands.

Today, I find value buying in 3 scrips coming up

NiftyBees - CMP is 525 and it may slip to 450 levels as well. With a 3 year horizon one can ignore the short-term volatility and accumulate on every 50-60 point fall. The longer term targets are 600+

BankBees - CMP is 885 and it may slip to 750 levels as well. With a 3 year horizon one can ignore the short-term volatility and accumulate on every 50-60 point fall. The longer term targets are 1350+

ITC - A stock in the consumption theme. Bulk of the revenues come from the tobacco business, followed by FMCG. The hotels line may not add too much in the bottom-line. 240-270 is a strong buy zone for longer term contracts of 375+ Dividends are also healthy.

Keep a Stop Loss with 2 consecutive closes below 200 as that will open ITC for 150 where one can re-enter.

If you can live with some short-term losses, the current chaos is providing good entry points. Happy Investing

Some Blue Chip Stocks Approaching Buy Zones - Part 2

As discussed last time as well, here are some updates to the value buying list for longer term investments

1] Larsen [LT]

Accumulation Band: 500-750 [Earlier band of 700-900]

Fundamentally sound company with good dividend yields. Over a 3 year horizon, it is expected to trade around 1250+ levels which is the profit-booking zone. One may start using current dips to buy for longer term investments.

2] SBIN
Yes the counter has some NPA issues as with all PSU banks. The warning that the counter is set to test 1600-1800 bands was given even when it was trading at 2750 levels. In the short-term, it may slip to 1400 also. However, bottom-fishing is difficult. Accumulation band is 1400-1800 levels. Should there be some short-term blips below 1400 also one need not be worried. The dividends and longer term target of 2750-3000 is intact for SBI. One can buy into these dips for a 2-3 year horizon.

These are 2 heavy weight index stocks that bounce back much faster than the index itself when the longer term uptrend returns.

Please note that the current price levels in SBI and LT are almost near 2010/2011 lows when Nifty was at 4500-4800 levels. The consumption theme and IT theme will soon lose flavor when the Rollar returns to normalcy and stretched valuations make themselves unfurl. One can comfortably deploy around 20% of one's investment amount in these 2 stocks in 3 to 4 tranches over the next 2 months.

This is indeed a value buying / discount buying opportunity that does not present itself often IMHO. Happy investing.