it's a clear nexus, so better to stay away from nifty as no reason for this rally, not at all justified in any parameter possible only if eps grows 50%+ for the coming yrs
indiamarketoutlook
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@bangalorean, If you see the market movement From November 2018 till March 2019, market was unsure of the Political outcome in the upcoming elections especially since ruling party lost some of the state elections. However with the election dates being announced and with some recent events, the smart money is probably sensing a possible single party majority once again at the Centre and that is what is being traded for i believe.
I am not a fundamental analyst but i do track some numbers related to fundamentals and PE @ 28.27 is certainly one of the most expensive market that I have seen. (Last time when PE was seen at such high levels was in Jan 2008)
But a few things I would like to point out;-
- 1st being the composition of Nifty - there is a drastic change in weightage contribution. From a time when IT use to dominate the Nifty weightage and contribute more than 30%, today that tag is taken over by the Banks. The top 5 Banks contribute 30% towards Nifty and that's a huge number.
- Now Banks are measured more on Price to Book ratio and that is currently at 3.64 which is much lesser than 6.55 that was seen in Jan 2008.
- Also Dividend yield currently at 1.17 is at much better valuation than compared to just 0.82 seen in Jan 2008 (Below 1 is considered expensive and above 1.8 is considered attractive valuation)
- also the fact that the euphoria associated with such high PE numbers is missing so far especially in small and midcaps makes an interesting case.
There is still some scope left. However No markets can be Superman... Up up and Away. There will be opportunities on the short side too. One just has to wait for the "Opportune Moment"
In a bull market, market has a tendency to see good things even in bad situations and vice versa in a bear market, it has a tendency to ignore the good news and focus more on the negatives.
French_Fries
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Don’t short a ponzi, let it run freely for a while.
indiamarketoutlook
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@French_Fries, yes i agree market has had its free run for a while and may even continue to do so for some more time who knows. we were on the wrong side of the trade this time but i still wouldn't use the word ponzi or manipulated for trades that went wrong for us as a reason.
After all Technical Analysis is a reactive trade. In a sense we are trying to understand what smart money is trying to do or may try to do, and make the most of it by reacting the earliest. isn't it... i simply accept that its all possible and it's all part and parcel of the trade. Chart is always right. It is our interpretation that may or may not materialize. We just have to ensure we lose less when it doesn't work and MAKE IT LARGE when it does.
“We all want progress, but if you're on the wrong road, progress means doing an about-turn and walking back to the right road; in that case, the man who turns back soonest is the most progressive.” – C.S. Lewis
Thanks for ur kind word of advice... "Let it run freely for a while" :-)
Cheers & All the best
French_Fries
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@indiamarketoutlook, I appreciate this detailed response, most of the people consider me a troll just because I’m 17 years old. I’m not pointing out that trade is wrong. The reason why I call this as ponzi because we are effectively transferring money from the people who came late to the people who jumped in to this market earlier. Now consider the situation in India, on an average with a well paid job one can earn 800k a year, With tax at 20% over 500k. Consider all the expenses and all and you will be left with little to money to invest in to stocks or to be put into a fixed income investment vehicle. How many average people do we know in real life who knows about stocks? Very few. My worry is that this market will not come back for a pretty long time if we have a collapse, which eventually will happen one day, sooner or later. The reason why I say that because people are not having money to fulfill the necessary expenses itself, I don’t see people getting wage raises and then top of it we have avg inflation north of 4% for past 10 years. And now these banks found new way to skin the people alive with all this SIP and Mutual funds, with tag line #mutual funds Sahi h, dad told me that back in the days they used to say “mutual funds are subject to market risk”. Then we have RBI cutting on interest rate with GDP at north of 7%, which makes me wonder if this economy is running on productivity or cheap money.
Okay I ranted enough.
Thing is majority of people are not preparing for the winters, Everyone is having party.
Who is C.S Lewis btw.
WaveTalks
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Atleast You know where not to trade. This is called proper risk management. Every Trader should know where they can go wrong if they want to survive in the market for a longer run. Thanks for all your efforts. Cheers!
indiamarketoutlook
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@AbhishekHSinghCMT,"Risk comes from not knowing what you're doing." - Warren Buffett
Congratulations on your new role. You are a role model for many aspirants. Tradingview is certainly in good hands and is moving in the right direction. I wish u and ur team all the very best and more success in the coming years.
Once again thanks for all the efforts that u guys have put in to develop and maintain this wonderful forum...
Cheers & Best of luck...!!!
PatilsMoneytree
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sbin may help
indiamarketoutlook
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@PatilsMoneytree, Banks have been the ones leading this rally. may be below 303.5 we may see some crack as you suggest. But Derivatives data as of now is indicating support at 300 odd levels. Till then It could be a little tricky...