A very warm Diwali greetings to our investors. This Diwali , we are forced to restrict our self not to issue a buying list for the year , because we believe that markets are not out of woods yet and may contain some hidden turbulence’s.
Let’s discuss this with different perspectives, as we at Investcraft approached our Market Expert Mr Alok to guide us on this Diwali with his enlightening Views he is famous for.
please read the complete conversation happened on Diwali eve on 31 October 2024
Investcraft : Happy Diwali to you ! Our investors are eagerly waiting for your market view and Diwali picks for 2024, please enlighten us
Alok : “A very happy & prosperous Diwali wishes to our investors! This Diwali is a bit different than of last few years and it will disappoint our investors that we are not coming up with any Diwali pick, because of uncertainty.
You know , as I always say , every rally is new in nature , and anticipation is a crime in stock market. You act only when you are confident about a trend , and that happens after market spend some time in that trend and you are bound to lose initial part of any tread. So let the current down trend settle in , then we identify the build up in sectors , to come to a conclusion that which sector will participate further , because markets keep the cycle changing.”
investcraft : Alright , we don’t have a shopping list this Diwali , but what about market guidance for coming months.
Alok : “Market is poised at very interesting position currently, with 2 possible scenarios. Let me divide this guidance as I usually do – into Technical, fundamentals and emotional scales
look at the last run of on Nifty Daily charts highlighted for you where market trend lines are clearly visible and prominent.
The chart which breaks out of these parallel lines (above trend lines) from June-Sept 24 , I believe, this was euphoria driven excesses of markets , which happens in all bull market rallies. By & Large , Nifty had a disciplined move within trend lines, which cannot be called excessive.
- Currently at about 24,000 , Nifty is at make or break position where there are 2 possible scenarios:-
Scenario 1) This is very likely that this downtrend continues, and market find its discipline within the same trend line again . So any break below 24,000 on Nifty will start another downward correction, which might be more painful, as many of our traders are still holding positions, as they haven’t seen a bull market correction in last 3 years and are used to a recovery. I already issued a warning on break below 24,700 that traders should book losses. If not , this second down leg may have a deep impact on their positions.If this scenario triggers and I find Nifty close below 24,000 , I will be a spectator, sitting on sidelines to initiate any position until I see 22,500 on Nifty.
Scenario 2) This is unlikely, but it is a possibility that we see the end of the correction here. Chances are less , because whenever a trend starts , it continues for some time (at least a quarter) . I’m not very hopeful for scenario 2″
Investcraft: How about other aspects- Fundamentals & Emotions?
Alok : Every Investor should must know that – Valuation is the mother of all analysis, and it has very basic and simple criteria to follow. But in recent times , we have seen many market commentators , social media influencers setting a wrong examples of justifying valuations with criteria which are not correct – like just seeing order books etc.
Fundamentally, I am crying out loud for last 3 months , We are expensive & Overvalued. I have personally exited my direct investment into markets in July 24 , missed a big part of rally until Sept , just for the sake of prices not justifying the performances.
Even after a fall from 26,000 to 24,000 levels , I am seeing a lot of pockets in market , where I personally am not comfortable to put my money into , even in Nifty 50 stocks. My fair valuation will be somewhere between 21,000 – 22,000 on Nifty .
One more phenomenon I would like to draw attention to those who have not seen previous bull market corrections. Even if market achieve its fair value , it still faces a time correction before it bottoms out
On Emotional front , fear is still not dominant over greed currently. Many traders are still confident about sharp recovery. Market may test their patience before it makes the bottom.
Investcraft : So overall you are not very hopeful for a short term recovery …. so what do you suggest us for Short term & Long term Investors .
Alok : ” I am not very hopeful for short term , but I am extremely bullish for long term. Market is all about timing it right and catching the trend early. Short term traders are still advised to stay away from market. You might get short bounces , which may quickly get washed out on profit bookings.
Long terms investors are the best lot in this scenario. They have made a good profit and would see some cuts in the portfolio , which can be treated as an opportunity to invest more. Long term investing cannot be a one time act , its a continuous process , so keep adding on every 6-8% fall on good stocks”
Investcraft : What to do If I am stuck in a trading position , purchased at higher price ?
Alok : “Short term trading positions which are stuck on high prices , can only be recovered in Long Term. If I have a stuck position which is already 20% down from its buying price , I would still exit at these levels and park my money in Gold , until I get better prices from exit.One Last thing for those who filled their portfolio with tending stocks of last uptrend , Please keep an eye on the trends & sectors closely and re-balance the portfolio. Usually every rally has its own set of favorite sectors and trendy stocks. Your wait of recovery may take longer than usual , if you don’t re-balance your portfolio according to next trend.”
