2011 - 2015 STOCK MARKET OUTLOOK
Before starting to 2011 rally , let see what happened in 2010 with broad Market. Nifty started the year with 5,200 and closed around 6100+. There was 3 Correction, 1st in Jan-Feb, 2nd in Apr-May and 3rd in Nov-Dec in 2010. Interesting thing to observe is that all 3 Correction was around 11% from its earlier peak and duration was also approx for 6 Weeks. Now what it indicates, it tells we are in long run secular bull market where we will have 10%-15% bull market correction in every few months. If my Wave counting is right, then we are in Wave 3 which means Nifty Target of 9,200. This wave 3 was started around 2500 in March, 09 and makes target of 8,800-9,200 in next 3 years. Hence, Long term outlook remains bullish and many Multibagger stocks for 2011, 2012and 2013 in India will emerge in future. Since, this is Wave 3 which means Bull Run will be based on macro-economic conditions and stocks will rally based on earnings and based on strong growth story. Remember, In Wave 1, 80% Stocks do well but in Wave 3, Only 50% stocks performs. Hence, Stock Selection is very crucial and not easy for good return.
As of Now, medium to Long term is still Bullish. Nifty has Strong Support @ 5690 then 200 DMA stands @ 5590 and then 5350. Hence, 5590-5350 will act as Strong Support for long term bull Market. If Nifty closes below 5350 then this Bull Market will be in Danger and 5120-4800 will come in picture. On Upside 6300-57 will be most crucial stiff resistance. Nifty Spot has made Double top @ 6330. 1st Top @ Jan, 2008 then 2nd Top @ Nov, 2010. Once Double top is taken out on weekly closes, then Sharp upside expected northward and later on it can act as strong short term Support and 5700 as medium term support too. Most of the stock market participants have started saying of 20% correction in 1st half and rally of 20%-30% in 2nd half. Is it possible?? May be or maybe not. Although, Correction is always healthy for Good Bull market in order TO buy stocks . But still what I know is one can’t buy @ Bottom and Sell on High. Hence, Follow Systematic Investment. Choose 5-10 Good business and invest every month and earn better return than any other asset class. When one will see market and its portfolio after 3 years, then 6,000 or 5,300 will not make big difference . Your portfolio should look like 60 % Large Cap , 25 % Midcap ,15% Small Cap .
The Sensex was volatile in the first nine months of 2010 and threatened to violate the 16,000-support, twice in February and then in May. But such a breakdown was averted on both occasions and the mood turned gung-ho, once it broke past the 18,500-hurdle, to take it very close to its previous life-time high of 21,208.
Long-term trend
As we stand at the threshold of a new decade and a New Year, the long-term charts have never looked this exciting. We are not talking about the next 12 months. It is a given fact that the year ahead will be choppy. It is the next 10 years that could see multi-fold appreciation in the benchmark.It is fairly obvious that following a long-drawn bear market between 1992 and 2001, a fresh bull market is now in progress. Wave 1 of this bull market ended at the January 2008 peak of 21,207. The 2008 crash was the second wave that ended at 8,047 in March 2009. The third wave of this bull market is now in progress.
At the commencement of 2010, the rally from 8,047 had not progressed sufficiently to enable us to judge if it was the B wave of the second wave, or the commencement of the third wave upward. In simple terms, we expected the bear market to have legs that could make it drag on for a few more years. But a strong move above 18,500 and the index nearing its previous peak indicates that we are in a fresh leg upward of the long-term uptrend. The targets for the third wave that is in progress from 8,047 trough are 39,337, 58,743 and hold your breath, 90,160. This wave can terminate at either of these targets and our preference veers towards the second. Extrapolation of the move that began from 1980 low also gives us a Sensex target in the 6-digit. And the time when these can be achieved…Wave 1 took six years and three months. Wave three can be at least as long or 1.618 of wave 1. That gives us mid- 2015 or mid-2019. That is, the next decade is going to be good for Indian equities. The long-term outlook will be roiled only if the Sensex goes on to close below 13,000. If corrections halt above 16,000, that would reinforce the positive long-term view for the index.
2011 .There will, however, be plenty of corrections, both shallow and sharp, that will provide buying opportunities within this uptrend. One such correction is in progress that can keep the Sensex in the range between 19,000 and 21,500 in the early part of 2011. Our preferred trajectory for the year ahead is that the index breaks above the upper boundary at 21,500 in the first half of the year to reach 22,846, 25,177 or 28,950. The Sensex can trade in a higher range with the lower boundary at 20,000 after it achieves either of the afore-mentioned targets. If the Sensex turns tail and breaches 19,000, it will receive strong support between 18,000 and 18,500. The next halt for the index would be at 16,000 & 14500 . Our preferred range for the year is between 18,000 and 25,000. The upper limit is 28,950 and lower is 16,000.
One can follow 7 general rules for better risk-reward while selecting Stocks for 2011-2016.
1) Avoid Large Caps with PE 30+ in any Sector
2) Buy Stocks with PE below 15 in Realty, Infra, Tea, Fertliser, Civil Aviation, Domestic Consumption, Education, Mid-Small Cap IT Companies, New Innovative theme with less debt and strong visible growth for 2 Years+ in systematic order.
3) Avoid all stocks which has come in the horizon of IB where promoters and Operators nexus is exposed.
4) Avoid Mid and Small cap where PE is above 20 in any sector.
5) Buy Multibagger Stocks in strong growth trajectory and economy driven irrespective of the fact there are no operators.
6) BUY Good Business not Good Stocks. Good Business always surprises on Upside but Good Stocks only Give ” Feel Good Factor ” not Capital Appreciations all the time.
7) AVOID Timing the market. If you think, you can buy your favorite stock @ Rock Bottom Price in next big correction. Then Think again, if anyone can buy stock @ bottom price. Then everyone bought till neck in early 2009 and by this time everyone would have become millionaire and must be spending long holiday in Las Vegas . When Nifty was 2,600, everyone was saying 2,000, @ 3,100 everyone was saying 2,600, @ 3,700 everyone was saying 3,100, @ 4,300 everyone was saying 3,700, @ 4,800 everyone was saying 4,300 and @ 5,400 everyone was saying @ 4,800 and now @ 6,000 everyone is saying 5,200 Time is more important than timing. Wait to increase your allocation when your stock corrects not to start investing. Correction will always come, but that should be time to increase equity exposure not to start, Otherwise one will become Speculator rather than Investor.
2) Buy Stocks with PE below 15 in Realty, Infra, Tea, Fertliser, Civil Aviation, Domestic Consumption, Education, Mid-Small Cap IT Companies, New Innovative theme with less debt and strong visible growth for 2 Years+ in systematic order.
3) Avoid all stocks which has come in the horizon of IB where promoters and Operators nexus is exposed.
4) Avoid Mid and Small cap where PE is above 20 in any sector.
5) Buy Multibagger Stocks in strong growth trajectory and economy driven irrespective of the fact there are no operators.
6) BUY Good Business not Good Stocks. Good Business always surprises on Upside but Good Stocks only Give ” Feel Good Factor ” not Capital Appreciations all the time.
7) AVOID Timing the market. If you think, you can buy your favorite stock @ Rock Bottom Price in next big correction. Then Think again, if anyone can buy stock @ bottom price. Then everyone bought till neck in early 2009 and by this time everyone would have become millionaire and must be spending long holiday in Las Vegas . When Nifty was 2,600, everyone was saying 2,000, @ 3,100 everyone was saying 2,600, @ 3,700 everyone was saying 3,100, @ 4,300 everyone was saying 3,700, @ 4,800 everyone was saying 4,300 and @ 5,400 everyone was saying @ 4,800 and now @ 6,000 everyone is saying 5,200 Time is more important than timing. Wait to increase your allocation when your stock corrects not to start investing. Correction will always come, but that should be time to increase equity exposure not to start, Otherwise one will become Speculator rather than Investor.
Which specific Stock to BUY for 3 year perspective??
The answer depends on one’s risk appetite and your financial Goal. If one is looking to earn better return than any other asset class. Then there are many Good stock picks. Few of the stock picks are YES BANK, SELAN EXPLORATION, BOMBAY DYEING, RELIANCE, GITANJALI GEMS, GODREJ INDUSTRY, CAIRNS INDIA, CHAMBAL FERTLISER, BAJAJ-AUTO AND L&T . One Can BUY these 10 stocks with Monthly Systematic way and expects 100% Return in Next 5 Years.
