Technical Analysis:IT Sector and its Main Components--TCS,Infosys,Wipro,HCL TECH

 

TATA CONSULTANCY SERVICES:

TCS closed the week on negative note losing around 1.30%.

As we have mentioned last week, that support for the stock lies in the zone of 2880 to 2910 where break out levels are lying. If the stock manages to close below these levels then the stock can drift to the levels of 2780 to 2810 from where the stock broke out of November-2017 highs and short term moving averages are lying. During the week the stock manages to hit a low of 2892 and close the week around the levels of 2933.

Support for the stock lies in the zone of 2880 to 2910 where break out levels are lying. If the stock manages to close below these levels then the stock can drift to the levels of 2780 to 2810 from where the stock broke out of November-2017 highs and short term moving averages are lying.

Resistance for the stock lies in the zone of 3000 to 3030 from where the stock has broken down. If the stock manages to close above these levels then the stock can move to the levels of 3080 to 3100.

Broad range for the stock in the coming week is seen between 2700 to 2750 on downside & 3030 to 3050 on upside.

INFOSYS:

INFY closed the week on positive note gaining around 1.70%.

As we have mentioned last week, that minor support for the stock lies in the zone of 1095 to 1100. Support for the stock lies in the zone of 1070 to 1080 where Fibonacci levels and short term moving averages are lying. If the stock manages to close below these levels the stock can drift to the levels of 1020 to 1030 where Fibonacci levels are lying. During the week the stock manages to hit a low of 1090 and close the week around the levels of 1128.

Minor support for the stock lies in the zone of 1095 to 1100. Support for the stock lies in the zone of 1070 to 1080 where Fibonacci levels and short term moving averages are lying. If the stock manages to close below these levels the stock can drift to the levels of 1020 to 1030 where Fibonacci levels are lying.

Minor resistance for the stock lies in the zone of 1130 to 1140. Resistance for the stock lies in the zone of 1160 to 1170 from where the stock broke down after consolidation. If the stock manages to close above these levels then the stock can move to the levels of around 1200 to 1220 where the stock has formed a top in the month of January-2018.

Broad range for the stock in the coming week is seen between 1070 to 1080 on downside & 1150 to 1160 on upside.

WIPRO:

Wipro closed the week on positive note gaining around 2.10%.

As we have mentioned last week, that support for the stock lies in the zone of 280 to 285 where the stock has formed a bottom in the month of December-2017 and long term moving averages are lying. If the stock manages to close below these levels then the stock can drift to the levels of 270 to 275 where Fibonacci levels are lying. During the week the stock manages to hit a low of 286 and close the week around the levels of 291.

Support for the stock lies in the zone of 280 to 285 where the stock has formed a bottom in the month of December-2017 and long term moving averages are lying. If the stock manages to close below these levels then the stock can drift to the levels of 270 to 275 where Fibonacci levels are lying.

Resistance for the stock lies in the zone of 300 to 305 from where the stock has broken down and short & medium term moving averages are lying. If the stock manages to close above these levels then the stock can move to the levels of 310 to 315.

Broad range for the stock in the coming week is seen between 270 to 275 on downside & 305 to 310 on upside.

HCL TECHNOLOGIES:

HCL Tech closed the week on negative note losing around 2.80%.

As we have mentioned last week, that minor resistance for the stock lies in the zone of 970 to 980. Resistance for the stock lies in the zone of 1005 to 1010. If the stock manages to close above these levels then the stock can move to the levels of 1050 to 1060 where life time high for the stock is lying. During the week the stock manages to hit a high of 973 and close the week around the levels of 937.

Support for the stock lies in the zone of 920 to 930 where break out levels and short term moving averages are lying. If the stock manages to close below these levels then the stock can drift to the levels of 880 to 890 where the stock has taken multiple support in the month of January-2018 and long term moving averages are lying.

Minor resistance for the stock lies in the zone of 970 to 980. Resistance for the stock lies in the zone of 1005 to 1010. If the stock manages to close above these levels then the stock can move to the levels of 1050 to 1060 where life time high for the stock is lying.

Broad range for the stock in the coming week is seen between 900 to 910 on downside & 970 to 980 on upside.

MORE WILL UPDATE SOON!!

TECHNICAL ANALYSIS:Banking Sector and its Main Components-SBI,HDFC BANK,ICICI BANK,AXIS BANK

 

STATE BANK OF INDIA:

SBIN closed the week on negative note losing around 8.50%.

As we have mentioned last week, that support for the stock lies in the zone of 290 to 292 where Fibonacci levels and long term moving averages are lying. If the stock manages to close below these levels then the stock can drift to the levels of 280 to 285 where the stock has opened gap up. During the week the stock manages to hit a low of 270 and close the week around the levels of 272.

Minor support for the stock lies in the zone of 265 to 270. Support for the stock lies in the zone of 250 to 255 from where the stock has opened gap up and Fibonacci levels are lying. If the stock manages to close below these levels then the stock can drift to the levels of 240 to 245 where the stock has taken support in the month of October-2017.

Minor resistance for the stock lies in the zone of 280 to 285. Resistance for the stock lies in the zone of 290 to 295 where Fibonacci levels and long term moving averages are lying. If the stock manages to close above these levels then the stock can move to the levels of 300 to 305 from where the stock broke down after consolidation.

Broad range for the stock in the coming week can be 250 to 255 on lower side & 290 to 295 on upper side.

HDFC BANK:

HDFC Bank closed the week on positive note gaining around 1.60%.

As we have mentioned last week that resistance for the stock lies in the zone of 1890 to 1900 where from the stock has broken down. If the stock manages to close above these levels then the stock can move to the levels of 1930 to 1940 from where the stock has opened gap down. During the week the stock manages to hit a high of 1898 and close the week around the levels of 1879.

Support for the stock lies in the zone of 1840 to 1850 where medium term moving averages and lows for the month of January-2017 is lying. If the stock manages to close below these levels then the stock can drift to the levels of around 1780 to 1800 where the stock has taken support in the month of November-2017 & December-2017 and long term moving averages are lying.

Resistance for the stock lies in the zone of 1890 to 1900 where from the stock has broken down. If the stock manages to close above these levels then the stock can move to the levels of 1930 to 1940 from where the stock has opened gap down.

Broad range for the stock in the coming week can be 1820 to 1830 on lower side & 1910 to 1920 on upper side.

ICICI BANK:

ICICI Bank closed the week on negative note losing around 1.80%.

As we have mentioned last week, that support for the stock lies in the zone of 315 to 320 from where the stock broke out of December-2017 high and short term moving averages are lying. If the stock manages to close below these levels then the stock can drift to the levels of 300 to 305 where long term moving averages are lying. During the week the stock manages to hit a low of 317 and close the week around the levels of 321.

Support for the stock lies in the zone of 315 to 320 from where the stock broke out of December-2017 high. If the stock manages to close below these levels then the stock can drift to the levels of 300 to 305 where long term moving averages are lying.

Minor resistance for the stock lies in the zone of 330 to 333. Resistance for the stock lies in the zone of 340 to 345 from where the stock broke down after consolidation. If the stock manages to close above these levels then the stock can move to the levels of 355 to 360.

Broad range for the stock in the coming week can be 300 – 305 on lower side & 350 – 355 on upper side.

AXIS BANK:

Axis Bank closed the week on negative note losing around 3.50%.

As we have mentioned last week, that support for the stock lies in the zone of 550 to 555 where the stock has taken multiple support in the month of January-2018. If the stock manages to close below these levels then the stock can drift to the levels of 530 to 535 where Fibonacci levels and medium term moving averages are lying. During the week the stock manages to hit a low of 531 and close the week around the levels of 538.

Support for the stock lies in the zone of 525 to 535 where Fibonacci levels and long term moving averages are lying. If the stock manages to close below these levels then the stock can drift to the levels of 495 to 500 where trend-line support for the stock is lying.

Minor resistance for the stock lies in the zone of 550 to 555. Resistance for the stock lies in the zone of 570 to 580 where break down levels are lying. If the stock manages to close above these levels then the stock can move to the levels of 585 to 590 from where the stock broke down after consolidation.

Broad range for the stock in the coming week can be 500– 505 on lower side & 550 – 555 on upper side.

MORE WILL UPDATE SOON!!

Why India’s Singapore ban is an own goal of sorts

While it’s true that Singapore Exchange has garnered a high share in one product category involving Indian equities, India’s own equity derivatives turnover has also grown at a fast pace.

  

A national disaster has been averted, we are told. Liquidity was migrating from India’s equity markets to offshore centres such as Singapore, and nothing short of a coordinated ban by all Indian exchanges was needed to stem the tide. Whatever the underlying reasons for this extreme step, the move will deal a body blow to India’s equity markets. It’s an own goal of sorts.

First, claims about migration of liquidity are a bit exaggerated, which raises questions about India’s capacity for evidence-based policymaking. While it’s true that Singapore Exchange (SGX) has garnered a high share in one product category involving Indian equities, India’s own equity derivatives turnover has also grown at a fast pace. In the past 10 years, average daily turnover on NSE has multiplied 12-fold to over $100 billion. Less than 3% of this comes from the Nifty futures contract, in which SGX has an almost equal share of trading.

Sure, Singapore’s high share in Nifty futures trading is a cause for concern, and has been highlighted in this column in the past. But the learning, if anything, was that some investors were staying away from India’s financial markets because of high transaction taxes and haphazard regulatory actions. For instance, traders largely congregate around the index options market in India, where transaction costs are relatively much lower.

The policy stance should be to take corrective steps and remove these inefficiencies. Instead, policymakers have chosen to shut out competition. “By blocking competition, India’s financial markets are being set up for greater inefficiencies. They can get progressively worse on services and costs, without a check from credible competition,” says an expert on market structure who asked not to be named.

In an essay titled Indian Economic Planning, Milton Friedman, a Nobel laureate in economics, had pointed out the high level of inefficiencies that came out of the country’s decision to ban imports of automobiles with a view to save foreign exchange. “New automobiles, copies of foreign makes, are being produced at a very high cost in small runs under extremely uneconomic conditions at four different plants in India. These are available by one channel or another for the “luxury” consumption it is said to be desirable to suppress. Many of their components are imported, and many of those made in India use indirectly imported materials. The result is that not only is the total cost of the amount of motor transportation actually produced multiplied manifold, but even the foreign exchange cost is probably larger,” he wrote in the 1963 essay. He also spoke of a used car he sold for $22 before leaving the US, a new version of which was being sold for as high as $1,500 in India.

Friedman’s anecdote also points to the fact that people find ways around bans and controls, and these typically involve far higher costs, which the entire economy has to bear. The market structure expert also wonders about the applicability of anti-competition law, since the ban effectively makes NSE a monopoly in the market for derivatives with Indian equity indices as the underlying.

By blocking out competition from overseas exchanges, India is almost saying that foreign capital is only welcome if investors bother making their purchases on Indian shores. This will shut out investors who have legitimate reasons for using other structures for exposure to India. A committee appointed by the finance ministry and headed by M.S. Sahoo understood this well and recommended even unsponsored depository receipts, so that the friction that keeps away some of the overseas capital from Indian markets is taken away. Sebi has ensured this product hasn’t taken off yet.

Similar fears are behind the ban on P-notes and now index derivatives trading by overseas exchanges. By shutting out these sources of capital, companies looking to raise funds will be hurt in terms of higher cost of capital.

Perhaps, some of us are being too cynical. What about the solution called Gift City that Indian policymakers have come up with for all of these problems? “Overseas investors needn’t think they are shut out; they are welcome to the international financial service centre in Gift City” we are told. But in doing so, India may be setting itself up for a new set of problems down the road. Just think about it: Which major economy that has a large-sized market of its own has created and promoted an offshore centre within its jurisdiction? Most offshore centres have come up in places such as Singapore and Dubai, which don’t have large domestic markets, and largely exist as a gateway to markets outside of their jurisdiction.

By promoting an offshore centre within the country, and now banning overseas exchanges from trading Indian equities, it’s a no-brainer that Gift City can end up cannibalising existing markets in Mumbai. If liquidity picks up to meaningful levels at Gift City, Indian trading firms may well migrate to take advantage of the tax sops in the offshore centre. Policymakers should worry about that sort of migration and fragmentation of liquidity more.

The Securities and Exchange Board of India was part of the discussions which eventually led to the ban announced by exchanges . The regulator would do well to present its views on these market structure matters with adequate data and evidence; else, as some foreign investors are reportedly saying, it wouldn’t be unfair to conclude that India’s financial markets policy making process is haphazard.

MORE WILL UPDATE SOON!!

Nifty Outlook for the Week (Feb 19, 2018 – Feb 23, 2018)

NIFTY:

Nifty closed the week on absolutely flat note.

As we have mentioned last week, that resistance for the index lies in the zone of 10650 to 10750 from where the index has opened gap down. If the index manages to close above these levels then the index can move to the levels of 10900 to 11000 from where the index broke down after consolidation. During the week the index manages to hit a high of 10618 and close the week around the levels of 10452.

Support for the index lies in the zone of 10400 to 10500 where break out levels and medium term moving averages are lying. If the index manages to close below these levels then the index can drift to the levels of 10000 to 10100 where the index has taken multiple supports in the month of November-2017 & December-2017 and long term moving averages are lying.

Resistance for the index lies in the zone of 10650 to 10750 from where the index has opened gap down. If the index manages to close above these levels then the index can move to the levels of 10900 to 11000 from where the index broke down after consolidation.

Broad range for the week is seen from 10000 on downside & 11000 on upside.

  

MORE WILL UPDATE SOON!!

Nifty Bank Outlook for the Week (Feb 19, 2018 – Feb 23, 2018)

NIFTY BANK:

Nifty Bank closed the week on negative note losing around 1.20%.

As we have mentioned, last week that minor resistance for the index lies in the zone of 25700 to 25800. Resistance for the index lies in the zone of 26200 to 26300 from where the index has opened gap down. If the index manages to close above these levels then the index can move to the levels of 26700 to 26900 where trend-line joining earlier highs is lying. During the week the index manages to hit a high of 25810 and close the week around the levels of 25164.

Support for the index lies in the zone of 25000 to 25100 from where the index broke out of triple top pattern. If the index manages to close below these levels then the index can drift to the levels of 24400 to 24500 where long term moving averages are lying.

Minor resistance for the index lies in the zone of 25700 to 25800. Resistance for the index lies in the zone of 26200 to 26300 from where the index has opened gap down. If the index manages to close above these levels then the index can move to the levels of 26700 to 26900 where trend-line joining earlier highs is lying.

Range for the week is seen from 24400 to 24500 on downside & 25500 to 25600 on upside.

MORE WILL UPDATE SOON!!

Technical View: Nifty forms bearish candle; brace for volatility in coming week

The index consolidated throughout this week, a pattern which is likely to continue in the coming week as well unless it breaks above 10,600.

  

The Nifty50 which started with a slight gap on the higher side on Friday failed to keep the momentum going as bears took control of D-Street in the second half of the trading session. The index made a bearish candle or a bearish engulfing candle type of pattern.

A bearish engulfing candle is a two-candlestick pattern which signifies that the index may be losing its current momentum. It is a pattern which consists of a small candlestick followed a big red candle which engulfs the trading range of the previous candle.

However, in Friday’s session, the intraday high of the previous trading session was slightly more than the intraday high registered on Friday. Hence, it is not an exact engulfing pattern.

The Nifty50 is now trading below its key short-term moving averages such as 5-day exponential moving average (DEMA) followed by 50-DEMA. The index consolidated throughout this week, a pattern which is likely to continue in the coming week as well unless it breaks above 10,600.

Hence, some bit of volatility in the coming week cannot be ruled out. The index has strong support near 10,270 levels. But, even a close below 10,398 could fuel more selling on D-Street.

The Nifty50 which opened at 10,596 rose to an intraday high of 10,612. It slipped more than 170 points from intraday high to hit a low of 10,434. It closed 93 points lower at 10,452 on Friday.

“The Nifty50 once again faltered after testing its 50-day EMA, whose value is present around 10,600 levels, before signing off the day with a full-blown bear candle. However, these kind of formations inside a trading are quite common and fails to attract follow-through selling.

Hence, as long as Nifty50 remains inside the trading range of 10,600–10,398 levels there will be a higher possibility of a sideways move within the said range. In the current consolidation phase of 7-day there are almost three such strong bearish candles which failed to attract follow-through sell-off, hence traders should not pre-empt a break down unless Nifty50 closes below 10,398 levels.

Mohammad further added that in the unfortunate event of breakdown correction shall get extended towards its 200-day moving average whose value is placed around 10,270 levels whereas upsides shall not be expected until indices close above 10,600 levels.

India VIX moved up by 0.38 percent at 16.37. Volatility again started to inch higher which is giving the upper hand to bears.

On the options front, maximum Put open interest stood at 10500 followed by 10000 while maximum Call OI is at 10600 followed by 11000 strikes.

Fresh and meaningful Call writing is seen at 10500, 10600 and 10700 strikes which is restricting it's upside momentum while Put writing is shifting to lower strikes like 10400 and 10300.

Option band signifies a lower trading range between 10,300 to 10,550 zones. The Nifty index witnessed sustained selling pressure throughout the day and finally closed near to its lowest levels by forming a Bearish Engulfing Candle on the daily chart.

It has been taking hurdle at its 50 DEMA from last eight trading sessions and cluster of supply is visible at 10,600-10,650 zones.

Taparia further added that if it sustains below 10,480 zones then weakness could continue towards 10,333 then 10,276 while on the upside immediate hurdles are seen at 10,550 then 10,600 levels.

MORE WILL UPDATE SOON!!

Not sure where Mr. Market is headed? Option guts can still help you profit

Buying futures needs a surety of the direction as the payoff is linear but Options can still help you add returns due to its Non-Linear Payoff behaviour.

Often we could see the market trading in a shrinking range and expect a breakout but not sure of which direction i.e. bullish or bearish.

Buying futures needs a surety of the direction as the payoff is linear but Options can still help you add returns due to its Non-Linear Payoff behaviour.

Options has several sweet-spots for trading and one of them is when the instrument is expected to move quickly (often within 2-3 days) for a direction and the existing volatility is low.

At such times, gain from the Greek component of Vega dominates the Option Pricing over a Theta loss. However, more the time to expiry, slower is the Theta decay and lower the hit of the profit & loss curve.

How to identify an Either-way Breakout Opportunity?

Indices/stocks normally witnesses a behaviour of a temporary halt after a strong directional move and before the trend continues. The trading range shrinks day by day into a visual technical pattern of Pennants/Flags etc.

These patterns can help you identify the breakout point. As the price moves more towards the apex, higher is the probability of a breakout either ways.

Trading one of the direction comes with a 50 percent probability and is no good whereas taking a forecast of Eitherways movement can add to some profits and Guts is a trade to get into.

What is Guts?

Guts is a 2-Legged Option Strategy which helps you make money from sudden movements in the Underlying which could be instrument soaring up or plummeting down. It’s a limited risk strategy, as only buying of options is involved in the trade.

To execute a Guts, 1-Lot of In The Money Call option needs to be bought along with 1 Lot of In The Money Put option with the same expiration.

The profit potential is unlimited and loss is limited to the premium paid. The disadvantage of executing a Guts could be a large Initial Premium outflow as both the options are In The Money.

When to Enter Guts?

A Guts can be opened with the three-step check:

1. If the Technical patterns move to the apex and breakout is expected as fast as within 2-3 trading sessions

2. At The Money Implied volatility is relatively low (As buying two options means buying volatility, no matter it’s a Call or a Put)

3. Expiry of the instrument has ample time to avoid exponential Theta decay. If not, Next Expiry can be looked at for a Guts to avoid significant Theta loss.

When to Exit Guts?

A trader should exit the Guts within 2-3 trading sessions no matter what the outcome is. If the move materialized fast, the strategy will make money from instrument going up or down.

Whereas on the other hand, if the move did not take place, the Theta loss will start hitting and a Time Stop Loss of 2 days can be extremely helpful.

MORE WILL UPDATE SOON!!

Looking for midcap marvels? Top 10 stocks from Dolly Khanna portfolio which rose up to 400%

Dolly Khanna, along with her husband who has been her investment advisor, raised stake in 1 company in her portfolio while she trimmed shareholding in 16 companies.

Looking for value in midcap space? Is it the right time to bet on broader market? Well, if you have these questions then you are not alone. A sneak peek into the portfolio of the expert stock picker, Dolly Khanna might be able to answer your questions.

The Chennai-based couple Dolly Khanna and Rajiv Khanna have a knack for spotting multibagger stocks and knows when to book profits. They have reduced stake in most of the stock for the quarter ended December when benchmark indices were hitting record highs.

The December quarter shareholding data suggests that the couple trimmed stake over 70 percent of companies in which they hold more than 1 percent, according to shareholding data disclosed by companies on the BSE. The couple made fresh investments in two companies.

Top 10 stocks from the Dolly Khanna portfolio which has more than doubled investors’ wealth in the last one year include stock names like Rain Industries, Emkay Global, Butterfly Gandhimathi, Asian Granito, PPAP Automative, Nocil, Thirumalai Chemicals, IFB Industries, Sterling Tools, and Tata Metaliks.

According to a report, Rajiv Khanna started investing in the market back in the year 1996 with an initial investment of Rs 1 crore which now worth over Rs 400 crore.

Dolly Khanna, along with her husband who has been her investment advisor, raised stake in 1 company in her portfolio while she trimmed shareholding in 16 companies.

Indian markets hit a roadblock post Budget in the month of February weighed down by weak global cues but the bigger declined was seen in the broader market. However, the couple pared stakes in most of the stocks, making most of the gains.

Stocks in which the couple pared stakes include names like Dhampur, Sugar Mills, Dwarikesh Sugar Industries, Emkay Global, Nilkamal, Ruchira Papers, Tata Metaliks, Sterling Tools, and Thirumalai Chemicals etc. among others.

They increased stake in Asian Granito, and IFB Agro Industries. They made fresh investments in Butterfly Gandhimathi Appliances Ltd, and Gujarat Narmada Valley Fertilizers & Chemicals Ltd.

Butterfly Gandhimathi Appliances Ltd is a leading brand in the country with Pan-India presence. Leading products are LPG Stoves, Mixer grinders, Table Top Wet Grinders, Pressure Cooker, Stainless Steel Cookware and Non-Stick Cookware. Other products comprise Juicers, Hand Blenders etc. among others.

GNFC is one of the world's largest single-stream ammonia-urea fertilizer complexes. GNFC today has extended its profile much beyond fertilizers through a process of horizontal integration.

MORE WILL UPDATE SOON!!

Deutsche Bank sees 10% Nifty rise in 2018, political instability as only risk to market

The Nifty had rallied 29 percent in the previous year, but equity returns in 2018 will not be as good as 2017.

He expects an upside of 10 percent on Nifty & Sensex by end of the year. Deutsche sees Nifty at 11,500 levels and Sensex at 37,000 by December-end.

He is not worried for market due to recent correction of 5-6 percent driven largely by rising US bond yield, which he thinks was actually was good. The market will see such correction intermittently going ahead.

Underlying corporate earnings recovery not only looks robust in India but also globally, and he is still constructive on equities saying it will continue to be the preferred asset class in current year.

PNB fraud case seems to have been contained within a few banks and the RBI also talked about injecting liquidity which is positive, but it raised concern w.r.t risk management system which has to be strengthened.

Credit markets are more vulnerable, but equity markets continued to rise despite rising bond yield. Hence one should not be worried as long as globally earnings growth seeing recovery and interest rates are not rising very fast. One should not be worried if US bond yields rise another 20-30 basis points, but the most worrisome part would be if dollar strengthens by 2-5 percent.

He feels political instability is the only risk that could spook markets in India. Economy is coming out of slow industrial growth and next financial year there would be no major disruption reform like GST, demonetisation, two droughts two-year ago etc.

Rural consumption story, which was somewhat dipressed in last one-two years, is seeing some pick-up. After conversation with companies, we are seeing some pick up in demand and that is where earnings growth surprises will come through.

In metals, he likes steel companies in particular due stronger demand, operating leverage and import duty protection. "Only risk we see for steel companies is stressed steel assets sale, wherein if someone overpays for the deal that risk would be watched. But otherwise, cash flow is improving and leverage is coming down, so quite positive on steel companies.

As syncronised global recovery is coming, he is construtive on auto ancillary space.

He said cement sector is a good way of playing the Indian infrastructure theme.

Cement has been one of the favoured sectors for last couple of years and that is continued in this year as well. Although in near term, pricing pick up may not happen but volume may go up due to rural infrastructure build up, affordable housing projects. So all in all, as a part of infrastructure them, cement stocks will do well.

Expect Brent crude to be in the range of USD 55-60 a barrel for rest of 2018.

MORE WILL UPDATE SOON!!

Porinju says politics to be trend decider for market, bets on 2 infra stocks

Benchmark indices have corrected about 6 percent and mid & smallcaps around 8 percent in the last 2-3 weeks, which was healthy correction, Porinju Veliyath, Founder of Equity Intelligence India said.

  

He believes the markets are not looking into any bubble territory, they look reasonable and healthy.

In fantastic rally of 29 percent on the Nifty in 2017, investors made average 30-40 percent kind of returns and smart investors made 80-90 percent returns; but in 2018, investors have to live with much lower return expectations, he said.

He thinks correction for the time being is done, but some stocks, which are still overpriced, may correct more.

According to him, one day kind of correction can be possible following the sell-off in global markets, but I don't think one needs to panic.

After sharp run and Union Budget, now the time has come that the market has to consolidate, he said. "We can't see 20-30-40 percent rally every year."

Porinju strongly believes politics will take the centrestage on Dalal Street over next one-and-half-years. In fact, politics will be trend decider for the market.

All-in-all, this is a year of consolidation but I am optimistic on investing front. India is in the midst of huge economic reforms, he believes.

Three Themes

Smart investors can create wealth by using midcap and smallcap theme for another 2-3 years.

The second theme is corporate governance.

The rally in Fortis Healthcare shares after promoters Malvinder and Shivinder Singh resigned and Supreme Court allowed to sell pledged shares is the best example of corporate governance, he said, adding it shows that how bad the promoters behave with investors community and country.

He confirmed that recently he bought some shares in the company.

He exited Future Group stocks which moved up by 4-6 times.

Buying stocks when they have a problem in the company and selling it when everything is perfect - is the mantra of ace investor Porinju.

He continues to be bullish on infrastructure space as there is large deficiency of infrastructure in India. India needs to spend Rs 10-50 lakh crore over next 10 years to help people to live comfortably.

But stock picking in infrastructure space is a challenge. He likes IRB Infrastructure which has reasonably healthy balance sheet and good business model.

He also likes Titagarh Wagons despite bad results. "The company lost big money in European operations but in India, it is still making some profits. Given the railway and related infrastructure allocation coming up, we have to be optimistic on these companies going forward."

Some of these are emerging companies within infrastructure space, he said, adding there could be future L&Ts in next 5-10 years.

MORE WILL UPDATE SOON!!