Nifty overstretching?

protrade

Well-Known Member
#1
With 2 quarters of results impacted by Corona, Nifty EPS is around 363 per index. Translating to 37 times PE on a trailing twelve month basis.

RBI hasn’t cut rates in last 3 meetings, and if they didn’t cut at the peak of the pandemic, it’s highly unlikely they will cut rates when the vaccine is coming out. And with SC stance on loan moratorium, it’s highly unlikely that we will see any relaxation on that front by the RBI.

What exactly is going to take the markets up from these levels, outside of pure momentum?

This is about the time when market starts looking forward to the budget - but considering the fiscal situation, it’s highly unlikely we will see a market friendly budget. Especially considering the insipid budgets we have seen from Nirmala Sitharaman last couple of chances she got, and the big promises she made, of trillion dollar infrastructure plan, etc, which never materialized.

Large companies like Reliance and TCS that have the power to drive up the index seem to have run out of steam. The rally in banks clearly is far beyond reason, because on the ground the situation is actually worse than it was this time last year. Some sectors like Autos, may see a fresh lease of life - because of the impact to the sharing economy caused by the pandemic - but the stock prices have already run ahead.

All the high dividend yield stocks which could have offered a safe haven have run up significantly - so there isn’t much safety in those names too. A stock like Vedanta that was an excellent buy in the 90’s is not as attractive over 130.

This seems to be a liquidity driven rally, largely in sync with global markets. And when we consider global markets, there are 2 major problems looming in horizon. Time is running out before US Congress breaks for Christmas - and it looks increasingly like there won’t be a stimulus before Christmas - which means, it will not happen till Biden takes over. And the Tesla inclusion is going to be a major dent to the S&P - because the higher Tesla is when it goes into the index, the more of the other 499 names index funds need to sell - plus Tesla itself will go down post inclusion. The impact to S&P 500 just by this inclusion could be as much as 5% post the 18th.

With this sort of background, it simply doesn’t make sense for investors to stay in this market. Nimble traders can hope to ride the momentum till it turns - but from these levels, any turn could be nasty.

Unless you have a strong stomach, better to watch from sidelines. From these levels, chances are there isn’t much upside you will miss out on!
 
#2
With 2 quarters of results impacted by Corona, Nifty EPS is around 363 per index. Translating to 37 times PE on a trailing twelve month basis.

RBI hasn’t cut rates in last 3 meetings, and if they didn’t cut at the peak of the pandemic, it’s highly unlikely they will cut rates when the vaccine is coming out. And with SC stance on loan moratorium, it’s highly unlikely that we will see any relaxation on that front by the RBI.

What exactly is going to take the markets up from these levels, outside of pure momentum?

This is about the time when market starts looking forward to the budget - but considering the fiscal situation, it’s highly unlikely we will see a market friendly budget. Especially considering the insipid budgets we have seen from Nirmala Sitharaman last couple of chances she got, and the big promises she made, of trillion dollar infrastructure plan, etc, which never materialized.

Large companies like Reliance and TCS that have the power to drive up the index seem to have run out of steam. The rally in banks clearly is far beyond reason, because on the ground the situation is actually worse than it was this time last year. Some sectors like Autos, may see a fresh lease of life - because of the impact to the sharing economy caused by the pandemic - but the stock prices have already run ahead.

All the high dividend yield stocks which could have offered a safe haven have run up significantly - so there isn’t much safety in those names too. A stock like Vedanta that was an excellent buy in the 90’s is not as attractive over 130.

This seems to be a liquidity driven rally, largely in sync with global markets. And when we consider global markets, there are 2 major problems looming in horizon. Time is running out before US Congress breaks for Christmas - and it looks increasingly like there won’t be a stimulus before Christmas - which means, it will not happen till Biden takes over. And the Tesla inclusion is going to be a major dent to the S&P - because the higher Tesla is when it goes into the index, the more of the other 499 names index funds need to sell - plus Tesla itself will go down post inclusion. The impact to S&P 500 just by this inclusion could be as much as 5% post the 18th.

With this sort of background, it simply doesn’t make sense for investors to stay in this market. Nimble traders can hope to ride the momentum till it turns - but from these levels, any turn could be nasty.

Unless you have a strong stomach, better to watch from sidelines. From these levels, chances are there isn’t much upside you will miss out on!
If Tata Motors starts running, it will take the index up single handedly.
 

Vmaster369

Active Member
#3
Market go up on worry of walls.
it;s bank that will earn money and institution... there will be always next tcs or next reliance ..

Lot of ppls are shorts thats reason market went up and will go even further beyond so Local retailers bank goes empty by margin call
then they will start selling and in 1-2 week market will come down to 200 dma then again cycle continues
it;s goldman sacks jp morgan Banks that rule finicial world

We indian thinks AAb kitna upar lega chaal short karte hai . what we don;t know is They have printed money and not hard earned money like ours so sky is limit for them

Trader life is 1 day profit 2nd day profit 3 day gives all back with interest.

it;s investor that makes REAL money who holds for 1-9 yrs .

And It; s Debt that can kill even company like tatamotors or let there be Reliance. buying JLR was not wise decision huh lol
Tata's are funny they make money in TCS and loose in tatamotors.

When Jessie livermore said Buy right Sit tight he didn;t mean in intra day Or swing trade.
He meant buy good company sit for a decade and took me about 10 years to understand what he meant in that line.
Heay ram kitne gadhe hai hum
 

TracerBullet

Well-Known Member
#5
Market go up on worry of walls.
it;s bank that will earn money and institution... there will be always next tcs or next reliance ..

Lot of ppls are shorts thats reason market went up and will go even further beyond so Local retailers bank goes empty by margin call
then they will start selling and in 1-2 week market will come down to 200 dma then again cycle continues
it;s goldman sacks jp morgan Banks that rule finicial world

We indian thinks AAb kitna upar lega chaal short karte hai . what we don;t know is They have printed money and not hard earned money like ours so sky is limit for them

Trader life is 1 day profit 2nd day profit 3 day gives all back with interest.

it;s investor that makes REAL money who holds for 1-9 yrs .

And It; s Debt that can kill even company like tatamotors or let there be Reliance. buying JLR was not wise decision huh lol
Tata's are funny they make money in TCS and loose in tatamotors.

When Jessie livermore said Buy right Sit tight he didn;t mean in intra day Or swing trade.
He meant buy good company sit for a decade and took me about 10 years to understand what he meant in that line.
Heay ram kitne gadhe hai hum
Do what works for you.
Long term investing does work. Just use broad indices, but be prepared for moderate returns and occasional deep drawdowns and returns can often come in small bursts between much longer periods of waiting. Often returns will come when everyone doubts the trend, so long term must mean long term. You can also add extra on few dips that we may get in a year.

Next, you can try to time or try to manage stocks, but here we have same pitfalls as trading and you need to have an edge.

Trading is not so bad, but you need something that works and not something only in theory. Market does not care for your theories or your emotions ( or maybe market triggers emotions to force you to make mistakes .. ) . But edges do exist. There is no holy grail though so ups and downs are always there, but cycles are smaller vs investments and returns much better - atleast for small/retail capital.
 
#6
With 2 quarters of results impacted by Corona, Nifty EPS is around 363 per index. Translating to 37 times PE on a trailing twelve month basis.
.... ~ SNIP~ ....
Unless you have a strong stomach, better to watch from sidelines. !
Nice observation !
But this site name is very Meaningful !
.. TRADERJI !

But in Lighter Vein :

Uptrend or Downtrend ... A TRADER just cannot sit idel on the wall !
... Just watch an opportunity and try to be IN THE MARKET with proper SL ! ... Karma Kiye Jaa - Phal-ki Chinta MatKar Ai Insaan !
:)
 
#7
tata motor weightage in nifty is just 0.58%. I doubt it can take nifty up single handed
Sometimes we see it holding nifty back singlehandedly, so I thought it could push up the index single handedly :D
 
#8
Market is near top of bull channel, hence expecting a correction however as livermoore said lets wait till market confirms !

"Markets are never wrong ! Opinions are ! Do not trust opinions including yourself. Let the action of the market confirm your opinions - Livermoore"

Hence I wont even dream of shorting till a double top comes !


image_2020-12-09_235409.png
 

sridhga

Well-Known Member
#9
With 2 quarters of results impacted by Corona, Nifty EPS is around 363 per index. Translating to 37 times PE on a trailing twelve month basis.

RBI hasn’t cut rates in last 3 meetings, and if they didn’t cut at the peak of the pandemic, it’s highly unlikely they will cut rates when the vaccine is coming out. And with SC stance on loan moratorium, it’s highly unlikely that we will see any relaxation on that front by the RBI.

What exactly is going to take the markets up from these levels, outside of pure momentum?

This is about the time when market starts looking forward to the budget - but considering the fiscal situation, it’s highly unlikely we will see a market friendly budget. Especially considering the insipid budgets we have seen from Nirmala Sitharaman last couple of chances she got, and the big promises she made, of trillion dollar infrastructure plan, etc, which never materialized.

Large companies like Reliance and TCS that have the power to drive up the index seem to have run out of steam. The rally in banks clearly is far beyond reason, because on the ground the situation is actually worse than it was this time last year. Some sectors like Autos, may see a fresh lease of life - because of the impact to the sharing economy caused by the pandemic - but the stock prices have already run ahead.

All the high dividend yield stocks which could have offered a safe haven have run up significantly - so there isn’t much safety in those names too. A stock like Vedanta that was an excellent buy in the 90’s is not as attractive over 130.

This seems to be a liquidity driven rally, largely in sync with global markets. And when we consider global markets, there are 2 major problems looming in horizon. Time is running out before US Congress breaks for Christmas - and it looks increasingly like there won’t be a stimulus before Christmas - which means, it will not happen till Biden takes over. And the Tesla inclusion is going to be a major dent to the S&P - because the higher Tesla is when it goes into the index, the more of the other 499 names index funds need to sell - plus Tesla itself will go down post inclusion. The impact to S&P 500 just by this inclusion could be as much as 5% post the 18th.

With this sort of background, it simply doesn’t make sense for investors to stay in this market. Nimble traders can hope to ride the momentum till it turns - but from these levels, any turn could be nasty.

Unless you have a strong stomach, better to watch from sidelines. From these levels, chances are there isn’t much upside you will miss out on!


You seem to be doing fundamental analysis on the index.
But bull markets happen when every one is in denial.
 

protrade

Well-Known Member
#10
We can trade fundamentals, and we can trade technicals. However, the psychology of the market is most critical aspect.

At current levels, I can’t see much upside. Do you see earnings jumping massively from here? I don’t. In fact most analysts expect continuing GDP contraction in next 2 quarters which doesn’t bode well for earnings.

If earnings don’t go higher, do you see PE expansion from 37? Till where? 40? Is that sustainable?

We have seen smart pickup in few beaten down names like ONGC, Vedanta, etc. But there’s also been a 1% strengthening in Rupee, which isn’t good for TCS and Infosys.

I would rather stay out or probably short in this market. Another interesting play is to sell covered calls - because upside isn’t going to be too high from here.
 

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