Stock Market Outlook & Investment Idea - 2011

It's been really long time since I've given recommendation to the investors and readers of this blog.

There have been tones of ups and downs in the markets during last one year, but finally Nifty and Sensex are managing to hold and give good returns to the investors.

I have got many queries asking for the stock recommendation which could prove to be good investment idea at this point of time.

Indian stock market Outlook - 2011

First of all let me reiterate the fact that there’s immense potential in the Indian stock market to do well over the next 3-5 years. I believe Indian economy would be triple in the size over the course of next 10 years. You can imagine the amount of wealth could be created if you invest in right company, right business at right time.

In particular outlook for 2011 looks good to me from the Indian stock market point of view. I expect earnings to grow around 15-18% next year, which would provide further upside to the stock market and justify valuation for the market. I believe sectors which are underperforming over the last 1 year or so would start catching up with rest of the market. It could be infrastructure, metals and oil & gas. I’m not so bullish on Real Estate even after recent crash in many of the stocks. I believe IT stocks should also do well and grow earnings by 18-20%. It’s worth to put money in some of the beaten down midcaps which has high growth potential. Let me recommend some of this which could make money for readers of this blog.

-       UCO BANK – CMP RS. 115: UCO BANK is one of my favorite stocks. I recommended this stock at Rs. 59 in January’2010 - http://indianstockmarketexpert.blogspot.com/2010/01/investment-idea-uco-bank-by-stock.html . It has proven to be good investment for the readers as it has touched high of Rs. 150. It was one of the best performing stock over the last one year. Now stock has retraced a bit due to recent scam news in PSU BANK.  It’s been consolidating for a while and formed a base around current levels. I believe it has potential upside of RS. 140 over next few months. I recommend buy for the stock with target price of RS. 162 and RS. 180 for the medium and long term view respectively.

-        IDBI BANK – CMP RS. 165: This is also one of the very good stock to remain invested for longer period. I recommended this stock at RS. 129 on 29^th Dec – 2009 http://indianstockmarketexpert.blogspot.com/2009/12/stock-recommendation.html. It has touched high of RS. 200 and now again available at reasonable valuation to get into the stock again. I believe this bank has got huge potential to become one of the larger PSU BANKS in India. It has got huge customer base, strong financial performance and investment in lot of companies in the stock market. There’s potential chance of listing of subsidiaries in the company which would again unlock value of this stock. I recommend buy on this stock with potential target of RS. 216 and RS. 234 over the medium and long term view.

Happy Investing!!

Risk VS Stock Market

People use to come and ask me "Is it safe to invest in Stock Market??". They don't want to take risk for the money which they earned by truly working hard for it.

This article is dedicated to all such investor who could earn more by parking their money in right investment instruments.

Please take a look at the below year on year comparison for the Sensex only. You'll see average return of 22 %. Even if you don't know anything about stock market this is just simple calculation and you would have earned lot of money by investing in Equity and Equity related instruments over the period.

Sensex Valuation
Year	First Trading Day of Jan	Last Trading Day of Dec	% Change
1991	999.26	1908.85	91.03
1992	1957.33	2615.37	33.62
1993	2539.62	346.06	1.75
1994	3465.86	3926.90	13.30
1995	3932.09	3110.49	-20.89
1996	3127.94	3080.20	-1.37
1997	3260.56	3658.98	12.22
1998	3694.62	3055.41	-17.30
1999	3060.34	5005.82	63.57
2000	5375.11	3972.12	-26.10
2001	3955.08	3262.33	-17.52
2002	3246.15	3377.28	4.04
2003	3390.12	5838.36	72.23
2004	5915.47	6602.69	11.62
2005	6679.2	9397.93	40.70
2006	9390.14	13708.34	45.99
2007	13942.24	20286.99	45.51
2008	20300.71	9647.31	-52.48
2009	9958.22	17464.81	75.38

Above comparison shows that investing in the stock market for longer period always rewards you with handsome return. Make investment as your habit and do it for long term.

For new investor or people who don't have time to check market pulse daily, I would recommend to investment in Mutual Funds. You'll be amazed by some of the Mutual Fund Performance.

Below table gives you idea about the enormous wealth a MF could create for you over the period of time.

Value of Rs 1 Lac - Invested in NFO
Company Name	Launch Year	Initial NAV	Present NAV	Today's Valuation
Birla Sun Life Mid Cap Fund	Oct'02	10	104.84	10,48,400
Sundaram BNP Paribas Select Midcap Fund	July'02	10	134.99	13,49,900
Reliance Growth Fund	Oct' 95	10	427.35	42,73,500

I would advice all the small investor to start SIP - Systematic Investment Plan to invest into MF schemes. This is the best method to start investing in Equity. This is same thing like recurring deposit you are aware of. Only difference is the return you get here. In recurring deposit you'll hardly get return of 6 % which has no comparison with MF returns where you'll get much more return for your valuable money. I'll come up with new article about MF schemes which has great track record for creating wealth for investors.

In country like India we have higher inflation. Most important if you'll check Food Inflation which is necessary for common man it's around 18 %. Do you think parking your money into Bank FD's would help you to sustain in the environment?

I won't answer this question. Take your own call and now rethink if investing in stock market or equity related investment instruments is risky or You are at much higher long term risk by not to investing in the stock market.

I'll come up with some more articles which will really change the way you think investing in the stock market.

Happy Investing !!

Market Outlook - Next Week : Rally to continue??

We've witnessed excellent rally on the Dalal Street last week. After facing resistance for last 2 months, nifty able to cross 5180 and touched intraday high of 5197.

Bulls have geared up in fashion and trapped bears on last Thursday. Initially bulls built up fresh long position in the market with force due to which nifty climbed to 5070 from 5040 in just two minutes.There were people on the short side. They were shocked by this move but still continue to hold short position. By the time they can think of anything nifty reached to 5100 and they had to cover short position which led market to reach around 5150 levels. On Friday market opened in green following positive global cues. It burst in the last hour and touched 2009 high of 5197, after remaining quite for the day.

Now what next?
There are few reason for me to continue long position in the market and I'm bit optimistic that nifty will move towards 5380 - 5450.

- Christmas rally is underway now and it's likely to continue for while.
- Markets have touched new highs after consolidating for almost 2 months. This could lead markets to add 3-4% rally as traders would become active now.
- Lots of People/Funds/HNI are sitting on cash and market is not giving them chance for entry. This money will come into action once nifty closes above 5200.
- Earning season will set tone for the market in January.
- Fresh allocation for the equity will take place in January for many FII and Funds.
- This Christmas party is likely to continue till mid of January unless there's some brutal correction globally.
- There's ample liquidity in the system which is keep on flooding into the stock market. So even if stocks look pretty expensive at this point but this liquidity could take stocks such high which no one has anticipated.

My Recommendation:
- This up move should take nifty around 5380-5450 levels.
- Traders should hold long position if they've taken it already.
- Fresh long position should be taken only if nifty closes above 5200.
- Investors should hold there position and partially book profit around nifty levels of 5380.

Happy Investing!!

Post Market Analysis - Bulls Vs Bear 18 Dec'09

Today it was Bull vs. Bear for indian stock market.

Thought the day nifty was hovering around 5030 mark and also touched intraday high of 5058 due to positive opening of European markets.
In the last one hour market has lost fare bit of ground and slipped below 5000. Nifty future was trading in discount and nifty went to 4972, finally ended at 4987 middle of support zone of 4970-5000.

Reality was the biggest looser today which sold off almost 2.5%.
So, now what’s next?

- Christmas is on the way, so global markets are likely to wait for the outcome and then react afterwards based on spending data.

- Indian markets are likely to remain in trading range with positive bias.

- I believe interest rate hike has already been discounted in the banking stocks. So if there's no major surprise from RBI then we won't fall much.

- Closely watch support zone and in nifty breaches 4960-4970 on closing basis then we are definitely heading towards much lower levels. We'll see lot of unwinding in nifty long position also traders may go for fresh short. So take a call based on nifty closing above 5000 or below 4960.

As its Friday don't worry about market. Just spend some good time with family.

For new investor,
I'll come-up with article about stock market education which should help lot of people.

Happy Investing!!

Market Outlook for 17 Dec'09

As mentioned in my yesterday's post about Market outlook, today nifty bounced back from key support zone of 5000 levels. It has not breached that level at all and then touched intraday high of 5072. Finally nifty closed in the green.

Yesterday, I recommended buying DEC 5100 CE at 69 Rs. Today it went up t0 81.50 Rs. One would have easily made almost 20% return on day one.

I would still suggest carry on with your long position and hold on to 5100 CE if you are already holding the position. You'll see nifty trading above 5100 shortly. Keep stop loss of 4970.

Fresh long positions could be created above 5055.

Now, what's next?

- Today bulls have geared up.
- Nifty future is trading into premium.
- Global markets are supportive. By the time I publish this article US markets - Dow and Nasdaq were up about 43 and 15 respectively. European markets were also trading high.
- Asian market are falling a bit for last couple of days, specially Hang Seng and tomorrow they'll might turn into green as global cues are supportive.

As all the above factors are positive and there’s no major cue for the market to break down, I would still go long on the market till nifty is holding above 4970.

Happy Investing!!

Market Outlook for 16 Dec'09

Today it was turbulence in the market. After opening in the green both the indices - sensex and nifty end in red. Now sensex is below 17000 and nifty is just holding above 5000.

Bank index was down almost 3%.

Now what is next??

All the expected news/triggers have already been priced into the market.
Like,
- IIP data
- Inflation data
- Advance tax collection

So there's no trigger for market to break any of the side. We are still into 5000 - 5180 range.
Also global cues are supportive as U.S. Markets are making new highs.

Now we are near to support zone – lower end of trading zone. Trader should go long in the market. All such deep into the markets are buying opportunity.

For the market strategy I'll advise to buy DEC 5100 CE at around 70 rs.

Keep the long position open till nifty breaches 4960.

Happy Trading !!

Market Outlook

The sensex and nifty closed in red today. After opening in Green and seeing some positive news on dubai front finally it was inflation numbers which has spoiled the party.
Now, Nifty is facing big hurdle in crossing 5180-5200 levels. It's been in the range for almost two months and still not able to cross all time highs. More of it's like psycological pressure.

Does market look tired? or It's just because there's no supply of paper from FII ?
Well, for now it looks like market is bit tired and it's not having conviction to cross 5180 in near future. In near future it look like we'll be having some selling pressure when nifty touches 5180-5200 range. Lots of call writing is happening at 5200, which suggest it's going to tuff for nifty to cross 5200 in december.

We may see some news on Rate Hike, as inflation is heading upwards. Mainly it's food inflation which needs to be controlled.

Even after all this things and hurdles, I believe nifty will take out this intermediate highs.
Few points related to this argument.
- As we know lot of people are sitting on cash who missed rally.
- Fresh equity allocation would be there from FII and DII. Likely to see lot of money inflows.
- U.S. is stil having rates near to "ZERO", which will keep on adding money into the system.
- Domestic consumption-growth story of india.

For short term we need to be really stock specific while investing in market.

Just wait for my next article, where I'll give you some trading idea for short term to medium term.

Happy Investing !!