Market is purely moving on technicals and I think 5950 is a very strong resistance and unless we can take that out on a closing basis, at least two consecutive days, market may tend to basically halt here.
we are in sync with global markets. My sense is that if the global markets don’t fall then the chances of 5950 taking out is also high and possibly if S&P goes above 1,344 which was at 52 week high and there it has been also taking a kind of a resistance for some time now, I think possibly our market rally also beyond 5950 will coincide with S&P also breaking out above 1344 or so. So it’s purely technical at this juncture.
Q: If investors are asking you for some stock ideas with a one year horizon and asking only for relative outperformance, what would your stock list be in the midcap space?
A: I can’t comment on stocks but obviously one should do his homework well. You have to know which stocks do not have major corporate governance issues or at least stocks should pay a good dividend. From a PE perspective they should be cheap and there is no major promoter selling that happens in that stock. There is no dilution of equity that keeps happening in many of these stocks.
If all those things are pretty okay and the stock is trading at a relatively low PE, which to my mind, is something like a 6-7 PE is a good level to enter and 10 is a good level to exit. So you can have a list of those stocks and possibly buy them in this juncture.
The caveat here is that market right now is trading more on technicals. Technically, if the market again tends to look bad, I think its market which is driving flows and not the flows which is driving market. So my sense is if the market again technically looks bad then you will see selling in the market.
Till the time market is looking good technically there is buying in the market.
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