Market view & Nifty Monthly chart & a Comparison- Does fundamentals justify
Prabhakar A.K
Nifty (6251)- Nifty has gained 9% for this month today being the last day of the month coupled with expiry it would be difficult day for traders. Today if nifty holds above 6220 then rally till 6320 & 6375 becomes possible while below 6220 then 6168 is a good support. . Nifty all time highest close is 6312 made on 5th November 2010 and all time high 6357 made on 11th January 2008.
Sensex has closed highest ever on daily closing basis and today being monthly close above 20509 it becomes highest monthly close. Sensex all time high 21206 made on 11th January 2008 if crossed then and sustained then this rally would gain strength soon.
The Federal Reserve decided Wednesday to hold monetary policy steady, saying that conditions remained too weak to pull back from its bond-buying program.
Derivate Settlement---Nifty has gained 6% from last derivative while few highest gainers are from last derivative are ADANIENT+48%, ARVIND+34%, TATACOMM+34%, FEDERALBANK+32, MRF+22%, while in Index pack AXISBANK+18%, RANBAXY+18%, MARUTI+17%, LT+17% & BPCL+16%.
While on loser or underperformer from last derivative front BHEL-7%, EXIDE-7%, NHPC-7%, COALINDIA-7% and RCOM-6%.
Nifty Monthly chart & a Comparison
Nifty is almost on verge of closing highest close on monthly basis and if we notice from 2010-2013 there is a Cup & Handle pattern and above 6338 that pattern would give confirmation and target for the same would 8145 and time frame could be next 18months if the break-out happens on 3-4days on closing basis.
Does fundamentals justify
P/E in 2008 January 1st week was 28times and price to book was 6.5times while as on 30th October 2013 P/E 18times and price to book 2.9 times and with results coming better than expected, and with most of the downgrades happening a small positive surprise can help market rally big and we have seen this in 2005-2006 when analyst had to upgrade their earnings revision post massive rally in market. Market always is very dynamic and rallies before green shoot can be seen, while when you hear economy back to 7-8% growth your P/E Multiple can be 25-28times by then.
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A.K.Prabhakar