10,000-10,300 could be bottom for Nifty, earnings have to deliver to match high valuations: JP Morgan

He feels domestic liquidity may be partially disturbed in near term due to change in taxation and rising bond yields; but he expects SIP and provident fund flow to continue going ahead.

  

Bears remained in charge at Dalal Street on Monday as well. The Sensex fell more than 500 points in opening trade, taking total two-day losses to more than 1,300 points, but it showed some recovery from that opening lows.

Bharat Iyer of JP Morgan, personally, feels Nifty could be bottomed out at 10,000-10,300 levels and the next month could be challenging for India as well as globe.

It meant the market can fall further from here on, though the intermittent recovery could be possible as Iyer feels the current fall is definitely a buying opportunity for investors who missed the bus earlier.

Broader markets have been hitting hard but that does not mean the end of bull market, he said, adding we are getting into matured phase of bull market.

Valuations definitely picked up in last six months on easy monetary policy and pick up in economic growth, but earnings will have to do tough jobs to prove valuations, Iyer said.

On earnings, in an interview to CNBC-TV18, Bharat Iyer said earnings picture is still frothy. The research house expects 14-15 percent growth in second half of FY18 against earlier 25-30 percent growth, so the financial year 2017-18 growth could be around 8-10 percent.

Globally, he said, earnings and economic growth are picking up. The research house expects US Federal Reserve to do four rate hikes but market priced in only 2, he said.

As he said it is definitely a buying opportunity and we are in bull market correction, he advises taking exposure to financials with solid growth, cement, tractor, construction equipment etc.

He feels urban consumption theme has long way to perform and there is a little bit of cognisance of cost of capital which has been rising.

He is neutral on rural focussed themes like two-wheeler space. If they deliver 8-10 percent volume growth then that could be good, he said. "Don't chase these stocks at these levels."

On Budget 2018 front, he said most countries in the world do have long term capital gains tax of 15-20 percent and in comparison to that, India is still better at 10 percent.

He feels domestic liquidity may be partially disturbed in near term due to change in taxation and rising bond yields; but he expects SIP and provident fund flow to continue going ahead.

MORE WILL UPDATE SOON!!

Fast & Furious! Top 12 stocks which rose up to 400% as Nifty rallies from 10,000-10,600

The Nifty 50 raced from 10,000 levels recorded on 26th July 2017 to 10,600 in January 2018 which translates into a gain of nearly 6 percent but as many as 36 stocks rose more than 10 times in the same period.

It has been a dream run for Indian markets in the year 2017. The Nifty50 closed above 10,000 levels for the first time in July 2017 but there were as many as 36 stocks which gave 10x return than the Nifty index in the same period.

The Nifty50 raced from 10,000 levels recorded on 26th July 2017 to 10,600 in January 2018 which translates into a gain of nearly 6 percent but as many as 36 stocks rose more than 10 times in the same period.

Stocks which gave 60-480% return from the period July 2017-January 2018 in the S&P BSE 500 index include names like Jai Corp, VIP Industries, Divi’s Laboratories, KEI Industries, Torrent Power, Adani Transmission etc. among others.

 

Stocks which more than doubled your wealth in the same period include names like HEG, Graphite India, Rain Industries, Bombay Dyeing, Phillips Carbon Black, Jai Corp, Meghmani Organics, Himadri Speciality, PC Jeweller, Gujarat Alkalies, VIP Industries, and Bombay Burmah.

For the year, the Nifty50 rose by about 29 percent but analysts caution investors to tone down their expectations from equity markets for the next 12 months. The index might at best give a low-teen return but the traditions of Nifty hitting fresh record highs is likely to continue.

The stupendous rally which we saw was driven not only by liquidity but also by hope of earnings and economic recovery (due to reforms by Modi government) going ahead, which had been lagging for many quarters in the past.

That kind of returns seem unlikely in 2018 though earnings and economic recovery look possible is the word coming from Aditya Birla Capital. What it expects is 12-15 percent return in the current year and the similar kind of uptrend is likely to continue in 2019 & 2020 as well.

Analysts do not expect a major correction on D-Street but a 3-5 percent correction could give a good entry point to long-term investors. However, investing should follow a staggered approach to investing because the upside remains limited.

Markets have been relentlessly rallying day after day with most stocks at their 52-week highs. The Midcap and smallcap universe in particular clearly seem to be in overvaluation zone.

This is more of a trader's market currently and the margin of safety for short-term investors is pretty low. Hence, new investments, if to be made for the short to intermediate term, are exposed to higher volatility and price risks.

We believe that if market indices are to correct by 3-5%, it will be a healthy sign for a sustained bull run to continue. We also believe that the budget will be rural and infra focused which will benefit sectors like Agrochemicals, Cement, FMCG and 2 wheelers.

MORE WILL UPDATE SOON!!