Markets cracked, was there an indication?

Post the killing of Iran’s Army Boss Quassem Soleimani, markets world over went into a jitter and so was it for India. We tanked 2% & continue to be weak.

Was this a surprise for the markets, were investors caught unawares? Not at all. It is just that this incident was a coincidence. Market was already showing signs of weakness from the last week of December.

After the up trend that began in September post the Corporate tax cut announcement, market had a 10% upside. In the course of 3 months that this up trend lasted, it began getting weak.

Any move for that matter, whether it is up or down, will come to an end after some time. It was the same with the markets this time. In this chart shown here, we can see as the price climbs 12k, indicators have begun showing weakness.Weakness on the index first showed at the end of November, while market did not give way, it kept pushing higher, testing patience of investors and traders. By end December, there were 3 attempts to move past 12K, each time it was only able to muster small strength.

On 1st Jan, Nifty tried to move into a new high, it lost strength as it approached close to the recent high and from there it could not manage to hold on further.

Soleimani’s death came only on 3rd Jan, it only added more fuel to fire. Else if not for this incident, some thing would have come and taken the markets down.

Almost always charts show up signs of weakness before any major events. It has happened in the past and will happen in the future. Those who had followed the indications, had the opportunity to protect their investments, either by selling the holdings, move into cash. Take a hedge with a short on futures or options. Or just be prepared that there is going to be a small move downwards and that needs to panic.

Even better option is to add to investments as these kind of events, I am not talking about the death, the correction in the markets, provide opportunity to take investments at a bargain.

Trades This week – 18 Nov 2019

Broad market is getting tight to reach higher levels. Chances are that, there might be a new high on the Nifty, while after that we should see a considerable correction.

In this correction there will be some good trending stocks coming to value zone and give long trade possibilities. Some of them in that list are Bata India, BPCL, Container Corp, Dabur, Hindustan Lever, Petronet & Siemens.

BEL had a long trade on Friday last, position has not done much, 20th November will be 5th day into the position, which is one of the exit rules. Tomorrow at market close, this position will exit.

In all the other expected trades, when there is an uptick on the daily charts we will have a trade. Will have the trades posted as they come through.

Chart of BEL Trade

ITC – A Long Term Investment

After September 2019 results where ITC declared a 35% growth in its profit, slow down in its mainstay cigarettes business. FMCG business showing nominal growth & having overall growth of 8% in its sales. ITC remains a dividend play, 500% dividend to continue as profits so far are meeting the requirement. Being an Innovation machine, ITC has always surprised the markets, this time with its FABELLE premium segment chocolate launch, priced at 4.31 lakhs a kilo, it creates world records and enters the Guinness Book of Records.

ITC has also become a fund manager’s favourite stock, has made its presence in 309 out of 700 mutual fund schemes. It has the potential to quadruple in 10 years. ₹250 investment today will be ₹1000 in the next 10 years, in between enjoy big dividend income.

Oct19 Webinar

In this webinar, we talk about Govt stimulus that failed to revive the markets expectation for the next year, equity portfolio performance and Nippon India Large-cap(Reliance Large-cap), A small review. Intro to BTT Stylebox.

Sept 2019 webminar

Market going up, not a sustainable up move due to low buying power. FPI taxes & Bank mergers propelled market to go up. 5% GDP was brushed off, which is a sign that market has bottomed. Expectation on GST cut, Auto and Biscuit segments where cut is expected while there will not be any positive change due to this. Present correction which is likely to stay for another year or so is a very good time for investing, to pick up stocks at a bargain. It is time to increase SIP’s as well as bulk investments. ITC is now in a attractive buy position for long term investors. Dividend yield on ITC stock is about 2.25%, similar to rental income. Whereas growth is expected to be around 400% in the next 10 years.