Your Master Voice………….

Nifty, after falling to 17659 last week, stabilized between 17800 and 18000 though FPI and market operators succeeded in holding it below 18000 for the weekly expiry and for that reason they had to write almost 1.3 Crs calls of 18000 strike rate. (Fishy as getting matching 1.3 Crs calls buying is difficult unless matched internally) Their purpose was achieved. Nifty 18650 to 17659 was almost a 1000 point correction after a handsome rally of over 930 points. This month was special for FPI and market drivers (operators) which drove market from 17711 to 18650 and from 18650 to 17659 a volatility of 1939 points which is 11% and just imagine the volume of calls and puts in this series. The point of Rs 12000 Crs selling was seen by everyone and consequent wild reaction that FPI are sellers in India. However to my mind it is cool biz of over Rs 50000 Crs in options on both sides. Rs 12000 Crs selling hardly matters.

Unless you understand this, you will never realize the reasons for selling. It was all concentrated efforts of bringing down the markets with v wap selling on the expiry day. Charts never work in such volatility. In fact, in 1 minute 100 Nifty up and down I have seen now only after Sept 2020.  All sort of rumours come only ahead of expiry and once the settlement is over next settlement start on clean chit. Mind it, you have been reading my notes all along and I have explained all the times that markets will go up. Even this time I reiterate that markets will have to rise. I still maintain 17300 18800 will be my call till Dec 21 and post that new high will be seen.  Once we see Nifty 18800 + then we will forget FPI selling and will start enjoying the rally. My point will be proved once we cross 18800.

There are no of gray areas which I cannot spell out here which certainly suggest that in India market discovery price mechanism is absent though legally it is claimed that we are the best in the world. The kind of controls in B group shares is out of the box. Market drivers seen using BAN as an effective tool and nothing is being done and the only affected class is retail. You do not know when it will go in ban. Green option shoes of 20 % need to be introduced in deciding BAN limit which will fail the controlled manipulations. In any case, this is not my cup of tea and suggest to bear with the system if you want to trade in F and O. Oct crash was for no other reason than the calls and puts premium.

Well, policy makers too have justification.... yes rightly said who told you to trade in options knowing that you are giving 10 to 15 % premium which will become zero. In fact, my alternative suggestion will be borrow funds at 1 % and buy same stocks in cash. You will be better off.  Here too you all are more intelligent and prudent than me and know your biz well.

However, this week an interesting observation was noticed. Bears became extremely active sensing an opportunity to go for a kill. We got various reports from various sources suggesting targets of Nifty 17300 17200 17000 16000 15200 15000 14000 and so on. I remember at 14500 one media guy in a what’s up group posted that 12000 will come, well, contrary to his expectation, Nifty went up by 3500 points. I will not speak on valuations again having spoken last week but certainly happy to notice this kind of pessimism. Reasons nothing new, Fed, rate hike, end of stimulus, end of Q E none of which fit in my mind. This time the pessimism is across the board. One gr was seen so frustrated and discussing that if market is range bound then big big correction will come.

At the time, when Street lacked confidence, I was standing firm with my vision and target of 18300 which saw the light of the day. When there is so much pessimism around, I see nifty traveling to 18800 as next target which will happen before Dec expiry. This is simply because after a big run from 14200 to 18650 market require consolidation which will be seen. When we enter in Q4 2022 then we will be factoring the F Y 22 earnings and also by that time BPCL divestment will be completed giving reason to allow Nifty to run past 19000. Well this is my call that 18800 is the upside which may not be necessary. In Oct I had said 18300 but Nifty went to 18650 so anything can happen. No one is perfect including me. Else I would not be writing a column for CNI members and my followers. Giving 60 % oil blocs to MNC in Bombay High is also a very positive step by NAMO to make India oil self reliant. This should be read as extension of fresh reforms.

Well, volatility will continue till Nifty crosses 18200, after which 18800 will be in straight run. 17659, we had already seen once which was not far from my support level of 17345  ( for simplicity I had taken 17300 base). Thus the difference was just 300 points hence I personally believe the correction is overdone. Till 15th Nov it will be result season. During result calendar, market never rises as profit booking is seen in most of the cases, post results. I believe all operators, whether they agree or not, knows the number, else why would one take Canara Bank shares in big quantity. When number are known profit booking possible. Those who buy after seeing numbers, get stuck on the wrong foot. After 15th Nov, big up move will start as earnings season will end.

Now the next full day market will open on 8th Nov leaving just a week for this consolidation hence forget what bears are talking and hold to your positions without fear. I hold that Fed will not tinker with rates and Q E so early, small tapering does not matter. Speculation will always be there and those who take calculated risks and remain on long side will see gains.

Many stocks have corrected 30 % but mind it all you are feeling heat as they have corrected from 52 week high but the fact remains they have run up 200 to 500 % and trade at unrealistic valuations. I am struggling to convince to buy stocks at F Y 21 PE whereas media and analysts are issuing reports at F Y 23 P E the latest I have seen is SBI.  I have no heart feeling for 30 % correction as they have run up. 

None of the CNI member is stuck in any high valued stock yet made huge wealth by timing the good quality stocks at right time. E g Tata Motors Tata Powers TTML etc. We have entered SBI at Rs 150 and thereafter 10 rounds already done making entire Rs 150 free for us. Our next target is Rs 700 n SBI.

I will suggest have a look at the CNI DIWALI PICKS which are all value bets but undervalued stocks where there is nothing much to lose in any market except probable  multi baggers where risk is there but gains could be huge. You can win only where there is chance to lose. Light your portfolio on this Diwali. Happy New year to all of you.

CNI REDEARCH LTD

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