Economic Slowdown – One more reason

Economic Slowdown is a cycle, it has to happen for healthy growth. Reasons that trigger such an event and what happens next. Thought of recession creates more savings, that gets invested into safe assets. Which is the safest asset?

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

Performance Linked Incentives in PSU Banks

Performance Linked Incentives for bank employees likely in the next fiscal. This is a dramatic shift to the way our bankers did business. Now, it will bring them at par with private. At first though it is talked that incentives will above the regular pay. Soon, good talent will begin to earn a fat salary and they will also help the banks compete efficiently among their peers.

When competition gets strong, quality comes in as a by-product. This shift will be one of the stepping stones for our banking sector that is struggling to catch pace with piled up NPA’s. Once the employees get drummed up, non-performers will get weeded out systematically, which otherwise will be a big pain to clean the system of un productive labour.

This change will bring the next one, hire the best, fire the rest. Though it will make many of the present staff jobless, the country and its citizens will be relieved on both their investments in the banks and taxpayer money not getting wasted to fund poor performance.

And this change will soon spread across other government enterprises, thereby making the country efficient in the way we do business. Though this change will take time to show its visibility in the economy, in few years from now, we will for sure see India at par with global peers.

And this kind of change is required, it would not have happened if not for the slowdown which we are having now. Everything happens for a good reason.

Voda-Airtel washout

Vodafone Idea creates history by declaring the highest quarterly loss on its results for Sep19. It declares a loss of more than 50K crores followed by Bharti shaving off 23K crores as a result of provisioning to meet Supreme court’s ruling on Adjusted Gross Revenue (AGR) dues.

Voda went a step ahead to declare that, they are ok to let the company go bankrupt while will not fund the losses any more. Bharti has said that, it has doubts on continuing to operate as a going concern.

This loss if goes on to a default, it will be staring at about a lakh crore of loan default to our bankers, where almost all of the names are in the basket of worry.

All of this losses just to make one persons greed a reality. Mukesh, in the need to be the dictator of Indian Telecom world, has attempted to ruin all those who are in the industry. Sad part is that, the government is supporting this ruthless massacre.

Money power along with greed is killing tonnes of public money. If suppose both these operators go under and Jio becomes the only operator, what will be the status?

Reliance, as their nature are with dictatorship mindset. They will kill everything to help them survive. Our population in the name of free service and low cost have made this monster get big in our country. Soon they will realise the disaster this monster is going to create in our country.

One would say that, it is normal competition and businesses go through such challenges. Competition is for sure good and healthy for both the business and economy. Here it is not ethical competition, to acquire market share and ensure that there are no other players left alive, through his money power and political clout, this one man is making the country

Trades This Week

Analysis to find trading opportunities in the coming week. We will be using technical analysis through the triple screen trading system to find trades in the coming week.

This effort will be a continuous activity with weekly updates. As I do analysis for my trades, I thought sharing it will help a few other aspiring traders as well bring a commitment in me to do the activity with discipline, which will enhance my trading skills.

Let’s begin with the broad market view. How is SENSEX & NIFTY?

Both SENSEX & NIFTY have scaled past their historic peak levels. SENSEX moved to a new high while NIFTY fell short a shade lower after crossing 12K. The current uptrend in price of both the indices have gained strength, where indicators are showing signs of further continuation of upward price move.

This said, it will not have a straight upside. In making it to the current levels 40K & 12K, both the indices have got tired and began their correction before getting to the next rally. Now, here is an opportunity for going long on Nifty.

Rating downgrade by Moody’s should take the indices down. Nifty can reach 11700 levels before making the next upside attempt.

How the industry groups are positioned?

Of the total 115 industry groups 65 are Bullish and 50 are bearish, so we can see a clear shift of the market to bullish direction. The concern here is that, out of 65 bullish industries, 47 are yet to show strength. And out of 50 bearish industries 38 are strong on the downside.

Now we get another confirmation for the correction that has began in the markets from 8th November. Bears are still showing some strength, after the correction that is going on now, some of the 38 will move up to the bulls side. By that time from the 47 bullish industries that are not strong yet will gain strength.

Now it is time for some shorts.

On the weekly charts the following stocks have a potential for short trades. Canara Bank, Lic Housing Finance, Piramal Enterprises & Cipla.

When market goes down and ticks up, there are potential for long trades in Container Corp, Divis Labs, BEL, HPCL & Mahanagar Gas

SENSEX at 40K – 2nd time

SENSEX has closed above 40K mark for the second time. Will the uptrend continue?

It doesn’t look like the momentum will continue as we have a slew of negative news hitting the market like the core sector output going down 5.20%. Under utilization of capacities not pushing private capex.

Rumours like new buyer in Yes Bank, fund infusion in Tata Motors, pushed up the indices. Markets also had a broad based rally as laggards did a catch up as the bottom for the market is now established.

What next?

All the big stocks that helped the markets move up have been showing tiredness on their price moves. There has been no big push on their September quarter results. All the profits that are coming in the results are mostly due to tax cuts for manufacturing companies and losses in the banking space again due to the same tax cuts.

Sales growth in the economy is slow. Off the results that are out so far, there is a little less than 5% growth registered. It is not a good sign.

What all of these developments are showing is that, we will have a market that will keep hovering in the range that we have established between July and October. Only if there is a significant buying power will the trend change for good.

At the same time, our markets will not breach the low we have established in the recent months. That assures of no big losses on the investments, while it requires patience to see gains.

As of now, there is no visibility of any sectors taking leadership, which is another concern. If the whole economy is a mixed bag, there will be more confusion than clarity.

So the wait continues…..