Bull Market is intact. Nothing to worry
Sonia Shenoy, the lucky mascot of Dalal Street, was visibly nervous today.
“SGX nifty down 40 points .. US markets end 4 day winning streak,” she said, her lips quivering.
SGX nifty down 40 points https://t.co/a2CCvRq5wd
— Sonia Shenoy (@_soniashenoy) October 14, 2020
However, Anil Singhvi, the charismatic editor of ZEE Business, was cool as a cucumber.
“Nifty ki chaal teji ke taraf hai,” he said in a soothing tone.
“Jab tak Nifty 11650 ki level na tode, aap ko darne aur ghabrane ki jaroorat nahi hai,” he added.
He explained that the Nifty has to pass through several crucial levels before one can say that the Bullish trend has changed.
11650 is a make or break level. If this level is broken in a decisive manner, we will have to change our stance from Bullish to Bearish.
Till then, we can continue with our punting without any fear, he advised.
Anil Singhvi appears to have sound knowledge about the markets. We saw how he and Nitin Murarka, a noted expert, had correctly predicted a few days ago that there would be aggressive short-covering.
This short-covering led to the Monster rally of 2400 points on the Bank Nifty and 1100 points on the Nifty (see Nifty Makes History By Surging 1100 points In Just 9 Trading Sessions. Experts Explain What Led To The Super-Surge)
लगातार 9 दिनों तक पॉजिटिव क्लोजिंग से बढ़ा कॉन्फिडेंस…
अनिल सिंघवी- 11650 न टूटने तक डरे नहीं, घबराएं नहीं… दोनों तरफ मिलेंगे ट्रेड के मौके…ऊपर में बेचें, निचले स्तर पर खरीदें…#EditorsTake #Nifty #BankNifty #StockMarket @AnilSinghvi_ pic.twitter.com/dl2dYVyMbu
— Zee Business (@ZeeBusiness) October 14, 2020
Whether Trump or Biden, stimulus is guaranteed. So, why worry?
Donald Trump and Joe Biden, the rival contenders for the post of President, are both agreed that the economy (and the stock market) deserves a stimulus of several Billions of dollars.
However, neither side wants to agree to the proposal until after the elections in the fear that the other side will capitalize on it.
This implies that we can be indifferent about which party will ultimately win the election.
“Ignore what is happening in the elections completely, almost pretending like it is not even happening and we let the price dictate our actions,” JC Parets rightly advised.
“The weight of the evidence suggests that regardless of who our president is, the trend in the stock market is up,” he added.
He also advised that we should spend our time looking for which stocks to buy instead of worrying about frivolous issues.
STIMULUS! Go big or go home!!!
— Donald J. Trump (@realDonaldTrump) October 13, 2020
I helped pull this country out of a recession before — and, as president, I’ll do it again.
— Joe Biden (@JoeBiden) October 11, 2020
Risk is on, stocks will go higher
JC Parets opined that the continued out-performance of the Mid-cap and Small-Cap Index implies that investors have developed an appetite for risk-bearing investments.
“When risk peaked in early 2018, the Nifty small caps started to underperform large caps. Lately, we have finally seen that shift where small caps have started to outperform and midcaps too for that matter. To me, that is further evidence of risk on and stocks continue to be higher. You want to be buying stocks,” he said.
It is also notable that thanks to the zero-interest rates prevalent in developed economies, investors have no choice but to invest in stocks.
This aspect has been explained in a brilliant manner by Bill Miller, the Billionaire investor (see The Stock Market Will Keep Going Up. Stop Waiting For Correction & Start Buying Stocks Now: Bill Miller)
Target for Nifty is 18,000
At one time in the recent past, nobody would have believed that the Nifty would ever touch 12,000.
However, the fact is that it effortlessly crossed the Benchmark a few days ago.
#NIFTY HITS 12000
— Geetu Moza (@Geetu_Moza) October 12, 2020
JC Parets opined that the Nifty is now gearing up to surge towards 18,000.
“Midcaps are outperforming not just in India, but around the world. That is further evidence that we are finally able to move on and if the Nifty 50 is above 11600, we want to be very aggressively bullish with a target near 18,000. That is where I think Nifty 50 goes next,” he said with immense confidence.
Top sectors to focus on
It is implicit that the sectors that are performing now will continue to perform in the future as well.
These sectors are InfoTech, Pharma and Banking.
JC Parets confirmed that this line of thought is appropriate.
“When you look at IT breaking out to new highs, that relative strength has a positive momentum. These are the leaders. When you look at Bank Nifty, it does not look that right. These are underperforming and showing relative weakness and a negative momentum. This is not just in India, bank stocks are some of the worst stocks in the world including in Europe and the United States. IT is what we want to stick with,” he said.
It is also implied that today’s underperformers, namely the Banking stocks, will be tomorrow’s outperformers.
Top stocks to buy
JC Parets gave a clean chit to Asian Paints, the consumer behemoth stock.
“Asian Paints is a stock that we have liked for a long time. It continues to work. For me, Rs 1,900 is the level. If we are above Rs 1,900 in Asian Paints I like it long. I think we will go close to Rs 2,600 there. There is one name that is showing positive momentum and relative strength and that is Asian Paints.”
It is implied that other stocks of the same pedigree as Asian Paints, namely Nestle, Pidilite, TCS, Infy, Dr Reddy, etc will all deliver humungous gains.
Reliance Industries, which has a mammoth 14% weight in the Nifty, will also obviously have to form a part of our portfolios as well!