Lets as usual look into Nifty 50 on weekly closing basis with respect to the P/E value to analyze the mathematically valid level for fundamentals.
- Nifty closing as on Friday – 10331.6
- Nifty P/E value – 25.65
So, equilibrium level should be still in range of 19-20 PE. So in order PE to be atleast 20 – Nifty has to travel towards 8055.82 to attain the equilibrium of PE.
The above chart of Nifty PE ratio vs Nifty chart gives you a brief idea upon how expensive our Indian market is still. The moment we crack down towards 9200 and below, we can look for towards hunting the investment picks on small scale basis, until then it is advised to sit on cash as said by experts. But media on general can mislead retail investors upon claiming to invest as media itself is used for the same purpose. So lets just wait for opportunity.
Nifty Technical AnalysisSo, we have plotted a fibonacci retracement tool on Weekly chart ( the number that can be seen 0.382 (9914.60) ). This is 38% retracement level. For any trend to continue , had the trend been strong it has more likeliness to bounce away from 38% level and move further upwards. That is evident already on the price. Another important factor that can be visible is price jumped off from “MONTHLY DEMAND ZONE”. Yes, we agree it bounced itself from the zone, but it has done it after 5 times which has tested the same zone over and over from period ranging Nov-17 till date. So, this many number of testing upon a zone can weaken, as it has poked the zone 5 times. We believe this zone can’t sustain another poke by the price. The only supporting zone that can be visible near proximity is 9700-9800 zone. And thats final. Beyond that , we have to analyze how low it could go.
Now on brighter side, if this 5th bounce is respected, we have a potential for Nifty to test 10500 initial basis and further on , we can see how it moves upon. On micro scale , a channel is drawn upon the price and we are currently on the upper side of the channel. Friday candle being formed is a DOJI , which is indecisive candle formation. The price has filled the previous GAP, just above it has a fresh supply zone on daily candle. Let’s dive a bit deeper through Nifty Option Chain analysis.
Why we look into option chain? Just to get an immediate level of Open Interest which has potential to act as Support or Resistance. Because, when we look into Out of money option strikes ( portion on white table ), it attracts major sellers as Institutions does it big time. On option – Sellers win 80% of time with time decay factor. So. if on a particular strike price, say there is high interest in institutions, they sell in huge quantity big time to the retailers who happen to be usually buyers on options.
So looking at the option chain data, 10500 CE has highest OI , 10000PE has highest OI and we are in between currently. So we can get a small glimpse that market might stay in between this zone for some time. A breach once it happens on particular strike, we can see further downside or upside which strike OI increases and can enable us to view the particulars.
Kwality Ltd, which recently made a QIP at around Rs.116, has fallen steeply. At half the price, the stock is a value buy.
The rumour of Chanda Kochhar’s involvement in the loan scandal concerning the Videocon group has sparked a big sell off in ICICI Bank. Investors willing to take a small risk may buy it the current beaten down price.
Escorts Ltd is on a big expansion drive. It’s beaten down share price merits a buy.
Indiabulls Housing Finance managed to withstand the market volatility to a great extent. Its inherent strength makes this stock a good buy.
National Aluminium Company (NALCO), the lowest cost producer of aluminium in the world, is raising its selling price. This PSU stock is worth accumulating for decent gains.
Opto Circuits, manufacturer of medical equipments and stents, has turned around and is on a comeback trail. A good buy at the current level.
Muthoot Finance plans to sell Rs.3000 crore worth of debt instruments to fund its expansion plans. Accumulate in small quantities.
Akzo Nobel India is planning a buyback. The stock can deliver reasonable returns in the short-term.
Suven Life Sciences has received a product patent from the Canadian authorities for the treatment of neurodegenerative diseases. Its patents are valid till 2033.
Eicher Motors plans to spend Rs.800 crore on construction of its second plant at Chennai to make the Royal Enfield motorcycle. It also intends to set up plants in Thailand this year.
Dilip Buildcon has obtained orders worth over Rs.2000 crore recently. Analysts predict another 20% rise in its share price in the next 3 months. Aggressive investors may enter.
L&T Hydrocarbons Engg, Larsen & Toubro’s subsidiary, has obtained construction orders worth Rs.3376 crore from Saudi Aramco. Its Q3 profits were also higher by around 48%. One of the best bets in the market today.
Lupin has received Establishment License for its Pithampur Unit. One more feather in its cap. Buy for the long-term.
Arvind plans to make around 40% garments in-house as against 10% currently. Its plan to expand its textile business to Rs.10000 crore over the next 5 years is a distinct possibility. Buy for the long-term.
Falling rubber prices and strong outlook for the global agri equipment market is driving the share price of Balkrishna Industries. The stock seems to be entering the bull phase.
Motherson Sumi System’s acquisition of Rydel, a supplier of interior parts, will add value to its share. There is ample room for appreciation.
Dhanuka Agritech is likely to report robust results for Q4. The stock may cross Rs.725 in about 3 months. A good buy.
The recent sharp correction in Can Fin Homes offers a good buying opportunity. There are talks that Canara Bank may soon revive its plan to sell a big stake in the company.
DCB Bank is being recommended by analysts in anticipation of a big rebound in profitability.
In an attempt to revive its business, Punjab National Bank has revamped its credit approval process and there are signs of improvement. It’s beaten down share price merits a buy.
Ballarpur Industries plans to sell all the assets of its Malaysian unit – Sabah Forest Industries. A positive for the company.
Nandan Denim is on course to notch an EPS of Rs.14 in FY18 and Rs.18 in FY19. It has expanded its capacity from 99 MMPA to 141 MMPA thereby making it the largest denim manufacturer in India and the 4th largest in the world. The stock may cross Rs.180.
Virinchi is expected to notch an EPS of Rs.13 in FY18 and Rs.18 in FY19. It has recently dive