Monday, April 4, 2011

NIFTY uptrend resumes - Small caps ready to rumble

Crazy buying by FII`s in India Stock markets in past 2 weeks.
  • Since 22 Mar`11, FII`s have been net buyers every day. and from that date to this date , total net buying is 9600 crores ( $2.2 Bn),  Domestic DII`s in the same period were net sellers of (- 2600) crores ( 0.6bn Bn)
  • Since 22 Mar, NIFTY is up from 5400 to 5900 ~ 10% after the18% drop from peak 6400 in 5-Nov- 10 to recent 2 month low of 5200. ( Mid/small caps have fallen at least 30-40% on avg. in same period)
  • Mid caps rallying 10-30% in last 3/4 days.....
  • Some questions :
  • Is this plain `slog overs` performance i.e March quarter ending , leading to FII funds chasing performance and  putting cash to work and will this reverse ?? ( cant say if 6000 / 6300 will be crossed again. ?
  • After the 160% rally in India from Mar`09 to Nov`10, a longer and deeper time -wise ( 3 to 6 months) and price wise ( 20 %to 30% correction) should be expected. But NIFTY broke below 200 DMA on 26 Jan 11 ( post here) and after staying below 200 DMA for just 2 months it is again above that level. This again shows it could be a bull trap and people shouldnt extrapolate this recent trend to projecting new highs in 2011
  • But the short term trend has definitely turned positive. 200 DMA of 5670 was crossed with ease and good volumes.
  • Fundamentals are ok but not that great as inflation will continue to hurt margins. PMI stable but PMI for inflation at near all time highs.
  • Macro again same as above. But dollar has resumed fall and testing new 2/3 year lows. This could also be a trigger for foreign funds shifting from dollar assets into non dollar assets. US markets are also near new 3 year highs. Same goes with Oil. Uncertainty on what after QE 2 close in Jun`11 could mean some slower rallies or sideways movement in April/May`11.
  • Sentiment factors are positive though - M&A - Foreign co.s buying indian firms continues. Buffet and Mark Mobius  playing role of global cheerleaders also help sentiment. and maybe India world cup victory will also fuel some more domestic risk appetite for stocks. Recently Mark Mobius said Indian small caps are looking attractive after correction.
  • Overall i`m still bullish on select small caps - still many lying around with 2x returns potential in 1-1.5 years.
  • But after the 8 /9 straight days rally and 500 NIFTY points rally, some consolidation and 2/3% pullback should be expected. But the strategy would be BTFD. ( Buy the F&*%#$@ dip)
  • With the developed world in no hurry to get out of Zero Interest rates, no point having an outright bearish view for long periods. I.e have to be nimble and run with the devils.

My current top picks / watch-list performance based on highest reward to risk ratio.

ACE.NSAction Constructi46.65+2.15(+4.83%)

ASCL.BOAsahi Song71.30+6.40(+9.86%)

AVONORG.BOAvon Organi (bse 35.65+2.95(+9.02%)

BALAMINES.NSBalaji Amines Lim45.85+1.90(+4.32%)

CERA.NSCera Sanitaryware169.70+7.65(+4.72%)

DFM.BODfm Foods Lt116.80+5.65(+5.08%)

DRAGARWQ.BODr Agarw Eye(bse 92.30-1.90(-2.02%)

FAGBEARIN.NSFag Bearings Indi848.55+12.05(+1.44%)

GSPL.NSGujarat State Pet104.15+2.30(+2.26%)

GUJRATGAS.NSGujarat Gas Co. L382.75+2.00(+0.53%)

GUJRECL.BOGujarat Recl1025.00-2.15(-0.21%)

HITECHGEA.NSHi-tech Gears Ltd116.80+8.10(+7.45%)

KKCL.BOKewal Kiran558.40+10.60(+1.94%)

LIBERTYP.BOLiberty Phos53.20+2.50(+4.93%)

LUDLOWJUT.BOLudlow Jute52.85+4.80(+9.99%)

MAYURUN.BOMayu Uniquot(bse 269.95+3.75(+1.41%)

NATPEROX.BONation Perox551.15+23.20(+4.39%)

NRBBEARIN.NSNrb Bearing Limit49.00+0.05(+0.10%)

ORIENTCQ.BOOrie Car Che(bse 110.80+8.70(+8.52%)

RIDDHI.BORidd Sid Glu(bse 310.00+22.60(+7.86%)

SHAKTIPU.BOShakti Pumps(bse 136.65+13.90(+11.32%)

SRINIHAT.BOSriniva Hatc(bse 121.60+4.10(+3.49%)

SUKHJITS.BOSukhjit St C(bse 275.40+23.20(+9.20%)

VADILINDQ.BOVadilal Indu(bse 152.05+4.75(+3.22%)

^BSESNBse Sensex19701.73+281.34(+1.45%)

^GSPCS&p 500 Index.rth1331.09-1.32(-0.10%)

^NSEIS&p Cnx Nifty5908.45+82.40(+1.41%)


.BOVtm Ltd 162.15+7.10(+4.58%)

PAPERPROD.NSThe Paper Product61.65+2.75(+4.67%)

CERA.NSCera Sanitaryware169.70+7.65(+4.72%)

LIBERTYP.BOLiberty Phos53.20+2.50(+4.93%)

RAMAPHO.BORama Phos Lt68.90+3.25(+4.95%)

TAIIND.BOTai Industri(bse 10.34+0.49(+4.97%)

BANCO.BOBanco Prod I (bse76.45+3.65(+5.01%)

SURYCOTM.BOSuryala Co M92.35+5.40(+6.21%)

ADORFO.BOAdor Fontech(bse 95.90+5.65(+6.26%)

FERROALL.BOFerro Allo C17.10+1.05(+6.54%)

SEAMECLTD.NSSouth East Asia M113.25+7.40(+6.99%)

ZFSTEER.BOZf Steering (bse 340.25+24.15(+7.64%)

GRAUWEIL.BOGrauer Weil(bse I68.20+4.85(+7.66%)

RIDDHI.BORidd Sid Glu(bse 310.00+22.60(+7.86%)

SAHYADRI.BOSahya Indu71.85+5.95(+9.03%)

SUKHJITS.BOSukhjit St C(bse 275.40+23.20(+9.20%)

ASCL.BOAsahi Song71.30+6.40(+9.86%)

KHAICHEM.BOKhait Chem F135.10+12.30(+10.02%)

MAITHANAL.BOMaithan All139.05+14.15(+11.33%)

TASTYBIT.BOTasty Bite172.90+26.90(+18.42%)

CHEVIOT.BOChevio (bse Indon334.35+35.45(+11.86%)

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