First, we must complement Nooresh Merani because unlike other experts who hedge their advice to cover all sorts of contingencies, Nooresh is confident and clear-cut in his opinion.
In his latest blog post, Nooresh has conducted a masterful technical analysis of the Nifty and explained why it is destined to go higher in the foreseeable future. The essence of Nooresh Merani’s analysis is that the Nifty is in “oversold” territory and that it will bounce back with a vengeance. He has given a detailed explanation to support his thesis. He has also cited several examples from the past to prove that whenever the Nifty has plunged steeply, there is always a vicious rebound.
Nooresh emphasizes that the impending rally is “as big an opportunity” as the ones seen on earlier occasions. “Some huge returns were made post such a bottoming out” he says.
He claims that Nifty levels of 7650-7800 will be an “excellent opportunity” to buy stocks and that there can be a rebound to 8050-8150 with a max level of 8250.
Nooresh has cautioned that most investors may have developed a sub-conscious “mental anchor” of the prices that they saw of their favourite stocks on Black Monday and that this may deter them from buying stocks till those levels are reached again.
He advises that investors should get rid of such anchors. He also advises that investors should stop worrying that there may be a further dip in prices. Even if there is a dip, it will be more than made up for in the impending rally, he says.
“Time to start investing and looking for stock specific opportunity starts right now” he says in a confident tone.
Of course, we must remember that technical analysis is based on the theory that everything will progress in a predictable manner and that there will be no untoward events. If some drastic and cataclysmic event like a currency devaluation/ interest rate hike, bankruptcy etc, etc takes place, then all bets are off the table.
At this stage, if you are looking for specific stocks to buy, you can consider the top ten stocks recommended by ICICI-Direct in their latest report. A similar report has been issued by SBI Caps. These stocks are of top-quality companies and even if the mega rally anticipated by Nooresh Merani does not materialize, there may not be much to lose in the long-term!