Nifty at a high - Living in the future ?


A smart decline in CAD in Q3 which is also at 4 year low and the announcement of the election dates has triggered a surprising rally well before expectations of many. All of a sudden sentiments have changed and analysts are speaking of 7000/7500 on the nifty due to improved macro economics, earnings visibility,...etc..etc---All of which to support the view that nifty will still rise.Don't forget It hardly takes a few trading session for these guys to change their views on the either side. Nevertheless FII's have been consistently buying and the rally might continue further in the short term as the momentum seems strong for now.

                     



                    

Markets are moving foreseeing the outcome of the elections on pure predictions based on opinion polls and other sources. Will the predictions come true ?? Only time can answer that !!
If the predictions go well we expect the markets to consolidate in the next half of the FY. On the other side if it doesn't, some huge volatility can be expected. The extent of volatility depends on the current rally which we are seeing. The more we rise, more the volatility !!

We already are witnessing a smart rotation of funds from defensive's to cyclical's. Pharma,IT, FMCG have been the theme for some time now i.e almost 4-5 years and they have given tremendous returns to investors. With valuation stretching it makes sense for some portfolio rejig .

Options investors have.

For now it seems right to move some funds from defensive's to cyclical's like banking, capital goods as the investment cycle can pick irrespective of the election outcome. 
Investors wanting to make fresh investments should strictly buy on SIP and be cash ready always to grab any opportunities markets give at a later point of time.
Investors willing to wait and watch i.e enter after election results are safest but however they will miss out on the current rally if there one.

Existing investors holding quality companies can wait for short term if thinking of profit booking. It is also wise to come out of junk companies during the rally and buy something worth.
From the current beaten down sectors-Pick the leaders or companies with able management who can grab larger business in the future when good times comeback.

Cautious approach.

It is very common you feel tempted to buy due to fear of being left out of the current excitements. 
Speed thrills but it can kill too.Never take decisions instantly. Plan/Decide what risk you are willing to take and act accordingly. 
Always stick to quality companies and don't buy any company which is going north . That way its safe to a certain extent as we can expect these companies to do good in the long term so that we will not end up with huge losses later if something unprecedented happens.

Never forget !!

Do not get too excited as markets which can give a 100 points rally on nifty can give a 200 points decline also.. The basic principles stays the same, "Markets takes the stairs up and Elevator down" !!! 

Regards,
R.

*Disclaimer : The view are entirely personal and one has to take a independent, responsible approach of his/her own.

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