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Now our Current Market View
As on 18 Aug 2010
For last 9 months , Nifty has
maintained our trading range of 4850 - 5450 .
For last 1 month Nifty is consolidating above 5400 levels and
showing a sign of break-out this time which made us revise our
mid term outlook from range bound (declared on 25 Nov 2009) to
up for a Target 6300.
"
Equity Market is
a smart system which discounts future events and earnings well
in advance and wait for those events to occur on expected lines.
It waits for the fundamentals to meet the expectations and then
react accordingly before calculating next course of
expectations. "
- Alok Kumar , Director - investCraft Technical Research
Fundamental View
There are so many things
happening which an investor (involved for last 8-10 yrs)
must be witnessing first time.
First time there was a fall of such magnitude in the market in
2008.
First time investors have seen upper circuit on the market
during recovery.
First time we have seen market trading in a range for almost 1
year.
Now lets see it all with smarter
perspective -
After a sharp fall from all time highs , almost 2/3rd of the
market cap was shaved off (from 21000 to 8000 on sensex) , smart
sense of market realized that scenario is not that bad what was
expected , which started a rush of liquidity into equity markets
, and markets around the world has seen a sharp recovery
(resulted in a V-Shaped recovery).
After reaching these levels -
market halted and waited for the fundamentals to catch up with
the expectations. Some sectors performed in line or better than
expectations ( such as Auto,IT,Banking etc) made new highs and
some sectors underperformed (real estate,cement,infra etc)
corrected after fundamentals failed to meet expectations.
This is how it goes and
sectors/markets get re-rated .Market has justified its current
levels by its performance and now its time for re-rating. At
current Sensex EPS of around 1100 we are trading at 16-17 P/E .
India being a high beta market , outperforming on every front
will smoothly acquire 18-19 P/E for expected FY012 EPS of 1200
to 1250 , which gives us a reason to believe that
Sensex may achieve new
all time high above 21000 within 2-3 quarters.
Technical View
As per the identified pattern in
our last report (click
here to see the last report) , the range bound movement
should get over and any close above 5500 will give us a clear
break-out.
On daily chart Nifty has formed a
double bottom formation which is a bullish sign, at 5420 level
,and it will get confirmed if it moves above 5500 on closing
basis.
Break above 5500 may
again provide a very sharp rally till new highs near 6300 , so
we are revising our Mid term trend to up for the target 6300
with a trend reversal point as close below 5250.
Director - investCraft
"
I'm open for suggestions ,
comments , criticism & feedbacks "
write to me -
alok@iicmindia.net
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