It was a super rally. Nifty opened gap up today . Nifty made a huge gap up of 200 points at open and still it was roaring , Nifty added 400 points within 30 minutes from opening. Traders were jumping in to and those who bought last day where running for exiting, then buying again. Some traders sitting idle for last day were entering , as a whole market was really celebrating the credible mandate for NDA. Market had taken the election result with very positive note. All sectors, except Pharma which is defensive participated in this super bull run.
Will Nifty stay at this level?
After initial thrust investor enthusiasm in Nifty started fading. Many counters suddenly seen profit booking. Super performers of last week like Tata steel started coming down. The sudden fall was initiated from IT sector. IT major Infosys shed 3 percent during initial hours itself. This was followed by TCS and HCL Tech. There were one group which was not participating this whole one week long celebration. You know that hard to crack rigid defensive man. It was Pharma. He don’t want to move today too. At around 11 AM today, the Pharma started coming down. DR Reddys and Cipla came slid sharply. After initial jump Lupin and Sun Pharma also took profit from high levels. Major culprit for today’s sudden profit taking were Hero Moto corp and Tata steel . Both shares lost 13% and 9% from their intraday high. Then we have seen many super guns of first hour trading coming down more than 5%. Today SBI made a high at 2507 , but finally closed at 2417. Ie 3.5% down from day high. Same way ICICI Bank taken 8% from intra day high.
At once we thought Nifty was going to scoop in to red. Almost it reached there. Then we have seen some strength in SBI , BPCL , Jindal steel ,Sesa sterlite, BHEL , Infosys etc which helped Nifty to sustain above the minus mark. Now traders concern is whether Nifty can stay at this levels or will this start booking profit.
We are not going to the narrate Nifty past story. All of us know very well that market was running up since September 2013. Many stocks could see their 52 weeks high during this rally. Only hardcore skeptical traders were sitting on fence . Many traders and new investors entered in Nifty though they could not benefit the total effect of rally.
Now analyzing the rationale behind this rally is very important. Stock market rallied with a hope of stable government and strong policy making with neo liberal backing from NDA. The first one is almost certain with BJP themselves getting the absolute majority. FIIs were pouring money into the market with expectation of more FDI in different sectors. But we are not so positive on these renewed hopes. Consider FDI in the multi-brand retail sector. The current policy allows state governments to choose whether to permit FDI in their jurisdictions, requires substantial local sourcing, and only allows investment in big cities. It represents the balance of power between large businesses that need FDI on the one hand and petty traders and small entrepreneurs on the other. Now BJP declared It is not in favour for FDI in retail sector. NDA cannot hold divergent positions that are divorced from ground realities. What We can clearly say that India’s foreign and economic policies are unlikely to change dramatically.
In short at least for the next 6 months we are not expecting a bigger changes in financial front as the would be finance minister will be engaged with hard realities of increasing inflation and current account deficit. We will be closely watching certain stock specific and sector specific moves . From Monday Market may start settling down. Nifty will go back to its fair values. This is surely an elevated level . Nifty cant sustain at this level with out the help of fundamentals. The euphoria surely need to end , we advise traders to participate in good stock picking even if those stocks trading in its high levels.
Will Nifty stay at this level?
After initial thrust investor enthusiasm in Nifty started fading. Many counters suddenly seen profit booking. Super performers of last week like Tata steel started coming down. The sudden fall was initiated from IT sector. IT major Infosys shed 3 percent during initial hours itself. This was followed by TCS and HCL Tech. There were one group which was not participating this whole one week long celebration. You know that hard to crack rigid defensive man. It was Pharma. He don’t want to move today too. At around 11 AM today, the Pharma started coming down. DR Reddys and Cipla came slid sharply. After initial jump Lupin and Sun Pharma also took profit from high levels. Major culprit for today’s sudden profit taking were Hero Moto corp and Tata steel . Both shares lost 13% and 9% from their intraday high. Then we have seen many super guns of first hour trading coming down more than 5%. Today SBI made a high at 2507 , but finally closed at 2417. Ie 3.5% down from day high. Same way ICICI Bank taken 8% from intra day high.
At once we thought Nifty was going to scoop in to red. Almost it reached there. Then we have seen some strength in SBI , BPCL , Jindal steel ,Sesa sterlite, BHEL , Infosys etc which helped Nifty to sustain above the minus mark. Now traders concern is whether Nifty can stay at this levels or will this start booking profit.
We are not going to the narrate Nifty past story. All of us know very well that market was running up since September 2013. Many stocks could see their 52 weeks high during this rally. Only hardcore skeptical traders were sitting on fence . Many traders and new investors entered in Nifty though they could not benefit the total effect of rally.
Now analyzing the rationale behind this rally is very important. Stock market rallied with a hope of stable government and strong policy making with neo liberal backing from NDA. The first one is almost certain with BJP themselves getting the absolute majority. FIIs were pouring money into the market with expectation of more FDI in different sectors. But we are not so positive on these renewed hopes. Consider FDI in the multi-brand retail sector. The current policy allows state governments to choose whether to permit FDI in their jurisdictions, requires substantial local sourcing, and only allows investment in big cities. It represents the balance of power between large businesses that need FDI on the one hand and petty traders and small entrepreneurs on the other. Now BJP declared It is not in favour for FDI in retail sector. NDA cannot hold divergent positions that are divorced from ground realities. What We can clearly say that India’s foreign and economic policies are unlikely to change dramatically.
In short at least for the next 6 months we are not expecting a bigger changes in financial front as the would be finance minister will be engaged with hard realities of increasing inflation and current account deficit. We will be closely watching certain stock specific and sector specific moves . From Monday Market may start settling down. Nifty will go back to its fair values. This is surely an elevated level . Nifty cant sustain at this level with out the help of fundamentals. The euphoria surely need to end , we advise traders to participate in good stock picking even if those stocks trading in its high levels.
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