As in the news, the reason for fall is the FII selling pressure due to FED rate hike again. It’s true upto certain extent. But, if one can go through the numbers, the impact due to that is very minimum. For example, from 1st October the gross sales by FIIs is Rs. 119,007.45 (Cr) where as Gross Purchase is Rs. 93,822.71 (Cr). The difference is Rs. -25,184.74 (Cr). Where as the DII Gross Purchase has increased to Rs. 86,569.01 (Cr) in comparison with Gross Sales of Rs. 65,549.97. Which is positive sign of Rs. 21,019.04 (Cr). The difference between FII and DII activity makes up just (-25,184.74+21,019.04) Rs. -4,165.7 Cr.
The current down trend may hardly continue till the first week-end of November. Correction is common in any Index. Can’t blame any single constituent that’s responsible. We are aware that there are many factors that will drive the market in either directions. By the time Nifty was traded at 11,760 points, many Big Caps have given multiple returns. Few Midcaps too have given big returns and others mid-level. Only Small Cap portfolios have been beaten down by almost 50% loss or even more.
Other factors, if we consider are just booking the profits occasionally on rise, due to the fear of fall before elections. Big individual investors started to book profits. Small retail investors also contribute to the small extent.
The quantity bringing in by the DII is more than the net selling quantity. As of 26th October’2018, the net the DII are buying more than the amount that of net FII selling (-1,356.66 & 1,875.89)
It’s true that the investors who were willing to go long are in big loss. There is no way but holding the portfolios. I suggest to hold and exit as soon as your buy price is reached. because the correction of Indian Indices may extend beyond 2019.
Down side expectation for Nifty 50 would be around 9650. Sensex around 32000.
Short-term Nifty Small Cap correction is almost over. Gains will start from November second week. Don’t decide to go long. Trade off at the resistance levels.
The above targets may vary slightly. Nifty has the chances of slipping down to 9500 levels.
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Big Cap Strategy
There are two possibilities.
In the first case, if there is a push back from the current low of 33, 291.58 (Sensex), Market will test this level again to move up. The upside will be somewhere around 38,000.
In the Second case, market fall will continue with slight push ups, till the resistance level of (29500-30000) and Nifty 50 (8900).
Markets are very sensitive. Even small contributing factors will drive them in different direction. So are the targets.
Anyways, our economy is continually striving to become self sustained. I’m expecting the previous rally in the indian indices from June’19 itself. So, better to hold your investments. Don’t sell off in hurry.
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Mid Cap & Small Cap Strategy
Simple. Neither sell or nor buy. Just hold. Expecting reversal back from where the long-term Big Cap correction starts. If not in the case of few much fallen small caps, will give you the chance to trade off. So hold is suggested.
All assumptions are made, purely based on ‘Technical Analysis’ as well as the prevailing ‘Socio-Economic’ conditions that may directly or indirectly affect all the businesses in general. Please do, your own analysis before investing. I’m not at all responsible for your future investment decisions.