Market Outlook: On Friday, the last trading day of the last week, the BSE index Sensex rose by 1181 points to 61,795 and the National Stock Exchange’s Nifty closed at 18,349 with a gain of 321 points. After this spectacular rise, now on Monday, good signs are being made for the stock market, about which experts are expressing hope. Kishor Ostwal, CMD, CNI Research, has given his opinion on how the market is going to move ahead and has given his estimate on the future outlook of the stock market.
Kishore Ostwal’s opinion on Nifty
Kishor Ostwal says that after touching the level of 18400, Nifty had come under 18,000 as if all the momentum was over. We see a downtrend in the market especially when the Nifty has gone high, every time the bears strike with full force and no exception is seen in this. However, there has certainly been no change in our approach. Nifty could not sustain the level of 18400 and we can say that there has been a decline of only 200 points. Talking about weekly expiry, there is always something special for option writers. Otherwise the option trade will come to an end which can never happen. Market players can run Nifty the way they want and can take the option premium. There are 120 million investors in the country, more than any other European country, and 50 percent of these trade in options, so the job is done for the market movers. In this market of transactions, if the market movers want to earn, then someone or the other will definitely have to bear the loss.
However, the big question is why the current level has come in the market? Has there been a correction in Dow Jones or because of the fact that the US mid-term elections have taken place. Or for the reason that the media and some selected experts have announced the arrival of capital of $ 20, 25, 500 billion in the market, due to which the boom in the market is being celebrated.
Movement in futures and options stocks
As far as the market is concerned, it is said that there is nothing new in it and it cannot be avoided. However, on the basis of this trend, we cannot buy the market at the time of New Year. The movement of future and option stocks is done keeping in mind the option and not depending on the inflow of capital. The flow of capital in the market does not come overnight and it is divided into different sectors (except banking and IT) especially in auto and metals. I am bullish on metals but will wait for 60 days to see clear results.
market will go to all time high
During this time it was also said that there would be a fall in the inflation rate and it has happened. All the short selling traders are trapped due to the increase of 1200 points in Dow Jones and above 18400 level of SGX Nifty. Apart from inflation, the US dollar is also declining, which is a positive sign for the Indian market overall and for metals. The market is currently in a very bullish trend and is ready to move towards the 21,000 level. Whatever it may be, the bears will play a big role in this. This week we have seen bears taking a downtrend are doing heavy short selling between 18200 and 18000 and will now take the market to its all time high.
Micro-cap stocks will benefit
Once the market crosses the all-time high, retail participation will be very high. This will definitely benefit the micro-cap stocks which have shown great results in the recent past. Apart from CNI Space, RDB Chemicals, AMD, Integra Engineering, Inspiresys, MK Exim, Triveni Glass have announced tremendous results. Micro-cap companies have taken time to prove themselves. Those who have proved themselves will soon become smallcaps. Here the above mentioned companies are moving towards becoming smallcap companies.
Some companies are undervalued
Some micro-cap companies are yet to declare good profits but their revenue clearly indicates that they are undervalued. You cannot judge a company on the basis of its profits alone. Had this been the case, Nykaa’s stock would have been trading at Rs 100 or less. Whereas Jet Airways would have been priced at Rs 10 or less. The most important parameter for companies is their revenue. For example Sunil Agro has not shown good profit but its quarterly revenue of Rs 56 crores shows annual revenue of Rs 225 crore for it. Its current market cap is less than Rs 50 crore, which clearly indicates that the stock is getting a huge discount. A big corporate action can suddenly be seen in this and then we will realize what I said about the company.
Old stocks have done well
Pick up my old picks in stocks like Cera Sanitaryware, VIP, Orient Aromatrix, Sandur Manganese, Vishnu Chemicals View stocks. You will find that when I picked up these stocks a few years back, their profits were poor but the revenues were at the same level. All these companies have become midcaps today.
Know about the two best stocks that were picked
I do not need to explain the valuation of Nifty again and again, but if you are a trader, then keep a bullish view on Nifty and keep a buying strategy on the decline. On the other hand, if you are an investor, try to buy value stocks which will give you at least 100% returns and some of these can become multibaggers. In order to enjoy multibagger stock ideas, you need to hold the stocks for at least 3,5 or 7 years. As you can see Shivalik which I had selected at the rate of 16 and now this share has come at the rate of Rs.650 per share. Whereas the share of Vishnu Chemicals which was selected at Rs.70 has now come down to Rs.2000 per share. Actually there are 200 such shares but I am not in the habit of tracking the share price. I realize only when someone from the CNI family of 23000 reminds me about my election.
It is important to know about these four stocks
Metal Coatings, Alpine Housing, Aakar Auto and Artifact are the four companies which are currently trading at 80-90 per cent discount and can surely prove to be 10-20 times multibaggers in the long run. When operators bring down the prices then only you have to leave them behind and only then you will be able to make profits. For example, operators brought down the shares of Aanchal Ispat at only Rs 10 per share and who benefited from this? We had identified this company at a share price of Rs 5 so that it could not harm our balance sheet and now the stock has come close to 52 weeks high. I can definitely say that this stock will grow at least 5 times in the next 12 months.
Effect of reading detailed report of shares
Read our detailed note on metal coatings where we took the perspective of an industry savvy. According to this, a one lakh tonne plant cannot be set up for less than three million dollars. This means that the value of the plant of Aanchal Ispat and Metal Coatings is 300 and 500 crores respectively. Its current market cap is 40 and 70 respectively.
crores then where can you lose money in the long run. So if the operators bring down the share price (already done in Aanchal Ispat) then this is a great opportunity to buy these shares. Operators have brought down the Alpine Housing stock from a high of Rs 93 to Rs 61 and this is the best time to buy Alpine Housing as it is in one of the best sectors. The company has a land bank of 90 acres and the company is trading at only 2 to 5 per cent of its intrinsic value.
On the other hand, if you do not want to invest in cash, then switching between techniques should be used.
Disclaimer: The shares mentioned here are the research shares of CNI Research. Be sure to consult your investment advisor before investing. ABPLive.com is not responsible for any kind of loss.
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