NIFTY is once again gaining ground and is within spitting distance of the all time high number.
That brings hope and speculation in the minds of traders and investors.
I posted my take on the recent up move on Quora today.
Sharing it here:
The countdown to Deepavali 2020 ( November 14, 2020 ) and the new high for NIFTY ( above 12430 ) begins.
NIFTY closed at 12263.55 on November 06 and looks set to make a new high soon.
As to whether it will go to 13000 and then 14000 levels is yet to be seen.
There will be both kind of predictions. There are hopefuls for whom these numbers are just around the corner. There are pessimists like me who believe that the recent up move from 10900 to the present level will lose steam and we shall go back to lower levels after making a new high.
Does it matter?:
Please have a look at your portfolio if you are an investor. Look at your profit/loss statement for the year if you are a trader. Touch your heart and tell yourself if you made money this year.
Markets are approaching the new high.
I have always maintained that such occasions are good for the chattering class on the business channels. Not for the retail investors and traders.
The devil is always in the detail.
You do not invest in NIFTY, you do that in various stocks.
And we are talking about the high quality stocks that make up the benchmark index i.e. NIFTY.
These are the stocks in NIFTY 50 which are losers for the 365 day period. Those 365 days include the last one month when the index has made some significant gains.
Let us ignore EICHERMOT as the decline is wrongly shown as 90% ( 1:10 split not accounted for ) but other than that there are 25 losing stocks out of 50.
There is a very good probability that most of the investors find themselves in these stocks. For them the move above 12200 has not brought any cheer.
This is where the trouble actually lies.
Frauds, cooking up of books, mounting NPAs, huge funds lying with the banks with no good borrowers are a sure recipe for disaster. The recent pumping up of these stocks may make people blind to the reality for a while but to expect a bull run to continue just hope would be too much.
Let us have a look at BANKNIFTY index and the stocks in that index:
Over last 30 days, this index has gained 17.26%.
We can say with certainty that this is the index which has brought back NIFTY to the level where we begin thinking of a new high.
Even with this stellar performance by the banking stocks, the index is down 12.45% for the year. Out of 12 stocks, only 2 are gainers over 365 days.
Does it give any hope?
Maybe it does to some people, to me it does not.
Are we going to see NIFTY at 13000 / 14000 in 2020 ?:
The momentum can take the index to a new high.
After that there is every likelihood of some cooling off.
Maybe, we may get near 13000 but 14000 is a far cry. Personally I am not hoping for even 13000 but who cares for what I think.
Getting the NIFTY highs or lows right gives me some bragging rights, it does not make money. That happens as a result of right trades. That is where our focus should be. Everything else is just numbers and idle talk.
Idle talks are good only for Sunday mornings.
Thanks for reading.
My recent answer to a similar question:
The link to Quora answer: