Mother of All trading threads!- Stocks, Indices, Commodities and Currencies!
- Thread starter nimish_rulz
- Start date
Considering the thin trading volumes lack of participation by the FIIs they have only bought for the last 2 days not sure if that is short covering or fresh longs. DIIs selling.Most of the money went into ADAG stocks. It can be distribution at higher levels we need to be careful. The entire world markets have moved up on very low volumes dow has negligible volumes in the past 2-3 trading days.
I think if nifty stays above 5200 tomorrow too there is a good value in Real Estate and Metal stocks.
Some IT stocks too
I think if nifty stays above 5200 tomorrow too there is a good value in Real Estate and Metal stocks.
Some IT stocks too
The upside target achieved and breached. Now I expect a down move to retest maybe 10,050-10,120 levels before the next leg up to make a higher high and lower low on the dow. My concern is that the rally has been on thin volumes atleast on the dow.
Commodities have started to rally oil has even breached the previous high it made on 5th may after the bail out announcement. Copper is still lagging but getting there.
AUS USD a measure of risk has been going up, EUR USD has been moving up. However the cause of concern is the volumes.
Nifty now has entered in a zone where it is fundamentally one of the most expensive markets in the world. A P/E of around 22 with a book value of 3.76 and a dividend yield of 0.98% this is alarming. As everytime historically when P/E breaches 23 and dividend yield on index falls below 0.9% we witness a correction. So a maximum upside to 5400-5500 level makes market extremely expensive and very risky however, this doesn't mean that we cant rally further. This expensive indicator signalled bearish on nifty last time on 27th Nov 2007 and remained bearish for the entire rally uptil 6000 on nifty till 8th Jan from where we started falling and correction came. However, the market became very cheap on 27th october 2008. I have used this tool on historical data and it has been able to predict a top or bottom in the market with considerable accuracy with a downside risk of maybe 5-7%.
However, if the global markets keep rallying nifty will rally too whether it is expensive or cheap it will follow the global trend. The best bet would be to look for fundamentally cheap stocks also showing some technical rebound now. That is my aim.
So according to the P/E valuation system and dividend yield when it falls below 0.95% or less than 1. I got first correction major one on nifty in the current bull market on 16th and17th October.
The second one was from 24th December up until 20th Jan it indicated markets were extremely expensive.
Then again from 17th March until 3rd May markets became very expensive.
Now again markets are entering that zone where earnings don't support the nifty price. But it doesnt mean current rally cant go on it can because it is based on sentiments. For the bull market to go longer I would expect a correction in it not now but soon before the begining of next year or early next year. A correction of maybe 30%. That would bring the P/Es and Book values down.
This is just a fundamental view. As American market is very cheap fundamentally and can rally a long way.
Australia, India, Japan, Brazil, Russia are worlds most expensive markets relatively.
Also if dow holds the current level of 10,350 for couple of days next target would be 10,700 which I expected to achieve in early july hence i believe, there might be a leg down still.
Nifty is looking bullish and is rallying continuously for past week and a half.
My only concern is the last 2 bars on the nifty the volumes are huge compared to previous day but he spread is very low. This maybe a sign of distribution. If nifty would have been in a down trend a complete opposite bar signals absorption but here it looks to me more like distribution. This is just my view and I maybe wrong. Distribution can takes months so markets can still rally. I just believe there is more bang for the buck and value in other stock markets such as China, Brazil, USA, UK, etc than in India compared to earnings potential. Economic growth wise and long term India is and will be one of the safest countries to invest long term though.
Commodities have started to rally oil has even breached the previous high it made on 5th may after the bail out announcement. Copper is still lagging but getting there.
AUS USD a measure of risk has been going up, EUR USD has been moving up. However the cause of concern is the volumes.
Nifty now has entered in a zone where it is fundamentally one of the most expensive markets in the world. A P/E of around 22 with a book value of 3.76 and a dividend yield of 0.98% this is alarming. As everytime historically when P/E breaches 23 and dividend yield on index falls below 0.9% we witness a correction. So a maximum upside to 5400-5500 level makes market extremely expensive and very risky however, this doesn't mean that we cant rally further. This expensive indicator signalled bearish on nifty last time on 27th Nov 2007 and remained bearish for the entire rally uptil 6000 on nifty till 8th Jan from where we started falling and correction came. However, the market became very cheap on 27th october 2008. I have used this tool on historical data and it has been able to predict a top or bottom in the market with considerable accuracy with a downside risk of maybe 5-7%.
However, if the global markets keep rallying nifty will rally too whether it is expensive or cheap it will follow the global trend. The best bet would be to look for fundamentally cheap stocks also showing some technical rebound now. That is my aim.
So according to the P/E valuation system and dividend yield when it falls below 0.95% or less than 1. I got first correction major one on nifty in the current bull market on 16th and17th October.
The second one was from 24th December up until 20th Jan it indicated markets were extremely expensive.
Then again from 17th March until 3rd May markets became very expensive.
Now again markets are entering that zone where earnings don't support the nifty price. But it doesnt mean current rally cant go on it can because it is based on sentiments. For the bull market to go longer I would expect a correction in it not now but soon before the begining of next year or early next year. A correction of maybe 30%. That would bring the P/Es and Book values down.
This is just a fundamental view. As American market is very cheap fundamentally and can rally a long way.
Australia, India, Japan, Brazil, Russia are worlds most expensive markets relatively.
Also if dow holds the current level of 10,350 for couple of days next target would be 10,700 which I expected to achieve in early july hence i believe, there might be a leg down still.
Nifty is looking bullish and is rallying continuously for past week and a half.
My only concern is the last 2 bars on the nifty the volumes are huge compared to previous day but he spread is very low. This maybe a sign of distribution. If nifty would have been in a down trend a complete opposite bar signals absorption but here it looks to me more like distribution. This is just my view and I maybe wrong. Distribution can takes months so markets can still rally. I just believe there is more bang for the buck and value in other stock markets such as China, Brazil, USA, UK, etc than in India compared to earnings potential. Economic growth wise and long term India is and will be one of the safest countries to invest long term though.
Some concerns about Spain emerging again.
Also EU commission thinks they will fail to meet target follow the report here for more details:
http://www.financespain.com/images/EUCOmmision.pdf
Also EU commission thinks they will fail to meet target follow the report here for more details:
http://www.financespain.com/images/EUCOmmision.pdf
P/E Expansion and Contraction
Well, if anyone plots Nifty P/E band and matches it with Nifty prices, then we would know that around 23-25 it is a good zone to short the markets and around 15-17 it is a very good time to buy. Below 15-17 and above 25-26 is a zone of irrational exuberance where any opportunity is like God sent.
While this view/model holds validity now, we need to see how it spans in the future. The reason I am saying so is because, stock markets have a natural tendency to go upwards. Research by some eminent researchers has proven this. Also, during an expanding economy (growing economy) it is also not unusual for the P/E bands to expand. By P/E expansion we mean that the value zone for buying and selling moves up. This has happened in many economies and one should not be surprised if this happens some time in India. Thus though this model holds positive expectancy now, the same cannot be said in future till the bands move up and brace themselves for the next decade or so.
Tc
Well, if anyone plots Nifty P/E band and matches it with Nifty prices, then we would know that around 23-25 it is a good zone to short the markets and around 15-17 it is a very good time to buy. Below 15-17 and above 25-26 is a zone of irrational exuberance where any opportunity is like God sent.
While this view/model holds validity now, we need to see how it spans in the future. The reason I am saying so is because, stock markets have a natural tendency to go upwards. Research by some eminent researchers has proven this. Also, during an expanding economy (growing economy) it is also not unusual for the P/E bands to expand. By P/E expansion we mean that the value zone for buying and selling moves up. This has happened in many economies and one should not be surprised if this happens some time in India. Thus though this model holds positive expectancy now, the same cannot be said in future till the bands move up and brace themselves for the next decade or so.
Tc
The next one month is going to be crucial Spanish bond yields are soaring up like they did for Greece already speculation that a guy from IMF is in Spain discussing credit lines. Job claims in US came worse than expected however, futures are still pointing to a positive opening.
Some reports by RBS on Spain and what is going on in the country. Yesterday the bond yields on Spain rose around 2.5% above German Bund a record rise in a day. Hence the need to be cautious still exists. I am fully out of the market even now. No short no long positions.
http://www.financespain.com/images/rbs_global_views.pdf
http://www.financespain.com/images/rbs_to_fx_and_beyond.pdf
Nifty today signalled that dividend yield, book value and PE wise it is turning into a very expensive market and bubble territory. Please be very careful however this is not the time to short. This bubble can go longer 15-20 days or even months. But be wise with your capital.
Most importantly it is the only market which ended up almost 1% in Major Asian markets. Most of them ended in red and are still 8-10% below their peak.
Some reports by RBS on Spain and what is going on in the country. Yesterday the bond yields on Spain rose around 2.5% above German Bund a record rise in a day. Hence the need to be cautious still exists. I am fully out of the market even now. No short no long positions.
http://www.financespain.com/images/rbs_global_views.pdf
http://www.financespain.com/images/rbs_to_fx_and_beyond.pdf
Nifty today signalled that dividend yield, book value and PE wise it is turning into a very expensive market and bubble territory. Please be very careful however this is not the time to short. This bubble can go longer 15-20 days or even months. But be wise with your capital.
Most importantly it is the only market which ended up almost 1% in Major Asian markets. Most of them ended in red and are still 8-10% below their peak.
Gujrat Nre Coke can give a good return in the next few days. Technically looks ripe for an upmove after strong consolidation. Target price of 75+ in 2 weeks time. Stop loss 57.5.
Fundamentals:
P/E of 60, Book value of 2.5. Fundamentally it is an expensive stock to own. If you believe in Fundamentals and believe in holding long term you can go for an alternative that is to buy Gujrat NRE Coke DVR. The dividend yield and everything is the same you don't get the voting right but the stock DVR is trading at almost 50% discount from the normal stock.
The reason for recent fall. One of the major reason was the introduction of Mining tax in Aussie land which now seems very murky and stock has discounted most of its effect. Second major reason is the fall in profits due to slightly higher interest payments depreciation and higher expenses. But the sales have increased in the same quarter signalling business is strengthening infact sales went up by 84.5% YOY. The expense could be one time as it is the only major expense company has made in the last 5-6 years. Both turn over and income from other sources is also rapidly increasing.
I like the stock and would recommend to buy with a price target of 75 with 57-58 as stop loss or depending on your risk appetite. Long term investor or people who are building a portfolio with 4-5 years horizon must look to buy DVR of the same company as the price should converge in the long run.
Fundamentals:
P/E of 60, Book value of 2.5. Fundamentally it is an expensive stock to own. If you believe in Fundamentals and believe in holding long term you can go for an alternative that is to buy Gujrat NRE Coke DVR. The dividend yield and everything is the same you don't get the voting right but the stock DVR is trading at almost 50% discount from the normal stock.
The reason for recent fall. One of the major reason was the introduction of Mining tax in Aussie land which now seems very murky and stock has discounted most of its effect. Second major reason is the fall in profits due to slightly higher interest payments depreciation and higher expenses. But the sales have increased in the same quarter signalling business is strengthening infact sales went up by 84.5% YOY. The expense could be one time as it is the only major expense company has made in the last 5-6 years. Both turn over and income from other sources is also rapidly increasing.
I like the stock and would recommend to buy with a price target of 75 with 57-58 as stop loss or depending on your risk appetite. Long term investor or people who are building a portfolio with 4-5 years horizon must look to buy DVR of the same company as the price should converge in the long run.
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