Tech musings :- Beast Unleashed

Indian mid cap and small cap stocks are showing tremendous momentum on the upside. Stocks form Infrastructure and industrial sectors which were languishing at the bottom due to self defeating economic policy of the previous government are showing a new sign of life.

Although I don’t expect Nifty to move up considerably from the current levels, small cap and mid cap stocks will continue to show substantial outperformance. If you see the equal weighted portfolio of 110 stocks, they went up by 6.38% yesterday compared to a Nifty which moved up by 0.84%. Today the portfolio was up by 2.03% compared to 0.16% up move in Nifty

I expect that this outperformance will continue for some time as some stocks are so severely beaten down they may quadruple in price from the level we entered.

I also understand that right now fundamentals of these stocks are not attractive and they will take considerable time to improve, but by the time you will see the number of these stocks improving the price would have already doubled or quadrupled from these levels. 

Equity investing to my mind is to an extent a leap of faith wherein you jump when thing are ambiguous and people are scared. 

I also like the following stocks and they can be bought at current levels.

Date	Name of Stocks	CMP
20-May-14	HINDUSTAN ZINC	150.1
20-May-14	JINDAL STEEL & POWER	288.95
20-May-14	LIC HOUSING FINANCE	326
20-May-14	NTPC	142.05
20-May-14	RELIANCE POWER	87.1
20-May-14	SAIL	88.25
20-May-14	SESA STERLITE	246
20-May-14	TATA POWER	97.2

Tech Musings :- NaMo Trade - Prophecy fulfilled

In my previous post on 9^th may 2014, I wrote “Hence I would say that if market stays at these levels till next Friday two things are certain. 

1.       Narendra Modi will be elected as the next prime minister of India

2.       Nifty will move towards 7200 – 7500 levels in short period of time.”

Both my predictions have come true. Indian market has hit a high of 25200 today. Sensex will move up by 3000 points in a matter of five days. I was expecting that the move will happen after the results will come, but I was also surprised as the up move happened before election results were declared.

If we look at the given chart of Sensex, it made a high of 25375 and had hit the upper end of the channel. I am not expecting a breakout of this channel anytime soon.  As per my understanding market should spend considerable time consolidating at these levels before they finally decide to break out. Any breakout of this channel will result into index moving up to 45000 to 60,000 in next 5- 7 years.

Summary:-

1.       Markets will face resistance at 25500 – 26000 levels

2.       Market should consolidate at these levels for next few months

3.       Once markets break out above 26000 - 27000, we will see index doubling in next few years.

4.       We are in a long term bull market.

Cometh the hour cometh the man -Congratulations to all my countrymen for voting a NaMo to power

Tech Musings :- Indian stocks

Although the entire PSU sectors have been milked dry in last 10 years and are suffering due to massive political interference, one sector has suffered absolute government apathy. Oil and Gas sector has seen total destruction in last 10 years but is now showing signs of revival.

I expect the entire PSU sector to perform well under the new BJP government which had given maximum autonomy to PSU companies in past (remember Vajpayee era when for the first time people started believe in the quality of PSU stocks) and Mr. Modi’s track record with state PSU companies.

I like Oil and Gas stocks and I feel that they can move up by 50% to 100% from current levels.  Following PSU stocks you can pick for your portfolio.  I am also expecting power companies to well under the new govt.

1.       BPCL – target 1000

2.       HPCL – target 800

3.       GAIL – target 600

4.       ONGC - target  500+

5.       IOCL – target 600

6.       COAL INDIA  - target  400+

The NaMo Trade - 5

I was looking at all the stocks in my India universe basket and most of them are breaking out. Out of the 650 stocks I track 110 stocks are breaking out of long term consolidation pattern. I have written about 67 of these previously. In this post I am adding the remaining 43 stocks which are looking great on charts. It is not necessary for readers to invest in each and every stock, they may pick and chose form the list and form their portfolio according to their investment comfort zone.