Understanding the previous bull run of Dec 2014 to Jan 31 2015

Understanding the previous bull run is very important because we need to know how it turned out into a huge correction. The market is correcting much more than expected. 8600 levels was the estimated correction. However, we have overshot it. The reason for the bull run was change of economic scenarios such as lower crude price with low commodity prices, political stability, the same Indian growth story as well as the beginning of rate cut cycle. When foreign money came into Indian markets most of the DII's were net sellers of stocks. DII's sold banks mostly.

Month	FII (Rs. Crore)			DII (Rs. Crore)
	Gross Purchase	Gross Sales	Net Purchase /Sales	Gross Purchase	Gross Sales	Net Purchase /Sales
January-2015	97,928.91	89,388.15	8,540.76	33,785.16	40,316.91	-6,531.75

 

Till 9th February data as follows.

TOTAL	28,243.77	30,006.07	-1,762.30	10,675.18	10,198.26	476.92

DII's where the clever guys who used this bull run to cash out and they are buying the stocks again that too at lower prices. DII's sold banking shares in that bull run because they felt it was overvalued. Now these stocks have corrected more than 12% in average. They are just following a simple theory, sell when prices are high and buy when the price is low. Only few disciplined traders and investors can practice this. During a bull market, we always expect to gain more and more, but the realty is that the market will correct some points. This is what we call Elliot wave theory. For every upmove there is a counter downside movement. Always expect this and buy in that dips.

Nifty at 8550 levels does not show any kind of consolidation mode. It seems like room left for further slide. We hope that it can start retreating from 8300 levels. Earnings were not as impressive as expected. Only budget is the hope left for the market.

Buy in to Pharma, IT as well as few FMCG companies as a defensive play since we do not know where we are headed as of now. Few stocks are worth buying at current prices are as follows.

1. Britannia Industries is a buy at CMP 1885.0 for a target of 2150.
2. Bharath Forge is a buy at CMP 1068.0 for a target of 1340.
3. Wockhardt is a buy at CMP 1315.0 for a target of 1700.
4. Yes Bank is a buy at CMP 800.0  for a target of 900

Many of index weights are corrected to now and you can try entering into Axis Bank, Tata motors as well as Cairn India.

Nifty target for 2015

Nifty continues its bull run without any doubt about its target. After breaking 8500 levels nifty has touched a fresh high of 8900. 400 points gain within a few trading sessions. Nifty can easily touch 9000 in this bull wave. 9300 can be possible if we receive fresh capital inflows to India.

 Global investment bank Citigroup in its latest report raised the December-2015 target to 9,850, at 16x Dec16. UBS raises Nifty target to 9,600 for 2015.We may overshoot the above mentioned targets and shoot up to 10000 mark considering the favorable economic situation.

However, it is not a good time to enter into market as most of the stocks are at 52 highs and above. We need to wait for some correction. Today nifty shown a sign of not ready to correct at current levels. We need to wait for few trading sessions understand the future movements and direction of the market. Be ready to book profits in this week itself.

RBI cuts repo rate ahead of Feb 3 policy review resulting in 216 points gains in Nifty

All stocks were in green when the market opened in the morning. The rate cut has been just a beginning. We can expect further rate cut and similar rallies in the stock market. Stick to Financials, auto and real estate.

Trade deficit during December fell sharply to USD 9 billion from USD 16.8 billion in November 2014. This is an icing on the cake. FIIs bought shares worth 1,738.24 crores. We can expect further momentum in the market. This will be the pre budget rally.

Yes bank can test new highs as the stock target was revised by Bank of America Merrill-Lynch raises Yes Bank Target Price to Rs. 1,050​. Currently trading around 813.