Indian Premier League is the most trending topic, as of now, for discussion all over the social networking sites as well as social gatherings. Interesting to note that even stock market traders are talking about them but for them IPL is “Index Premier League”. Almost every day (for investors every month), they try to find which sector index is out performing NIFTY and they try to bet on the best stock from that index.
Looking at the NIFTY’s track since my last month issue’s article for “V-share” magazine, it has been a dream run for the stock market. I had mentioned that India was struggling with politically instability but within that a turnaround in the form of lowered inflation and better IIP numbers brought some life to bulls. Banking sector analysts expecting a rate in next month’s bank policy as inflation has cooled off. Policy was to be announced on 3rd May but financial sector has already shown their interest or biasness towards the possible rate cut. On 13th april I did posted on my blog that banking sector will lead nifty and we noticed that it outperformed it with a return of 9.9% while NIFTY has returned 6.2% over the same period. This was surely in anticipation for the rate cut but now markets need some other reason to move on.
Since expiry yesterday we saw some profit booking in banking stocks and nifty dropped down today with sweeping 44 points. Earnings season has started and many frontline scripts have announced their result but IT has been disappointing street. Last decade i.e., 2000-2010 was IT boom for the markets but I feel next decade it going to be banking decade for Indian market upto 2020. Reason?? We have seen that Internet or computers have reached almost each state and to be specific even few villages but Banks?? Yet to be reached villages. Private sector banks have started entering villages and that will be reflected on their balance sheets in coming years. 70% of the GDP constitutes of Agri products and we have seen government announcing subsides to farmers. But now recently they have agreed for special “Kishan Credit Card”, loans etc which all will be credited directly to end user i.e, farmers bank account. So primary need for all farmers is to have bank account and for this we need banks in villages. With this facility farmer would avail many other banking facilities which would benefit them as well as Banks balance sheet. For this simple economic reason I feel next decade is going to be banking dominated.
Now as per Elliot wave bank nifty has a long term target of 21000 with leading private sector banks such as ICICI bank, Axis bank and HDFC bank, while on small banks we can bet on DENA Bank. Last time I mentioned that nifty was in no trade zone from 5400-5630 and bullish above 5630-5850. We have seen some strong bottoming out around 5600 and I hope traders and investor were long over that level. Herewith the attach graph is Nifty’s month chart and we could notice that it has strongly shown characteristics of perfect Elliot wave. In technical terms we are in 5th Wave of the larger third wave of the super 3rd wave of Grand 3rd wave. I know terms are lil tricky but to say in simple terms we still are in secular bull market. Every dip is a buy for long term
Strategy on NIFTY: Nifty could see some profit booking now upto 5773 and max upto 5610 but take this as a buying opportunity rather than to short for those who missed it. I expect markets to say consolidated above 5770 but 5610-5655 should be respected. So buy on each dip before 3rdmay with short term targets of 6045/6150 on nifty with a medium term target of 6500.
Note: All the data and graph is as of 26th April 2013 closing
Disclaimer: I may have personal position in index and above mentioned stocks. Views and News mentioned above may have Errors and omissions. My views are biased more towards technical analysis. Please read and study the market carefully before investing on my idea. For any suggestion contact me on my email. Some words mentioned in article don’t mean their actual meaning. They are correlated for market.