A combination of global events including rising oil prices, a few earnings misses, a brewing conflict between Italy and the European Union over budget spending, and apprehension over rising interest rates weighed down the markets in October. Here is a quick update on ten key sectors:
Automobile: In the past one month, the Auto index has underperformed by declining 9.0% compared with a 6.2% fall in the market. In the last few months, automobile sales have been affected by rising fuel cost, higher insurance premiums, and recent price hikes by automobile companies. In October, M&M and Hyundai reported a strong growth versus a m/m decline in September 2018.
Banking and Finance: Results in Q2 FY 2019 were mixed, with most banks failing to trigger a positive sentiment. HDFC Bank and Kotak met estimates, whereas IndusInd missed expectations.
Capital Equipment: The sector has weakened in India this month due to market headwinds like indices falling to their 52-week lows, the rise in oil prices, and a weakening rupee. On a positive note, equipment manufacturers could benefit from the ongoing U.S-China trade war.
Consumer: The Nifty FMCG index grew 7% YTD but fell 4.6% m/m, hurt by valuation contraction since the end of August. Dabur is down due to lackluster Q2 earnings, while Nestle and Britannia may be the safest bets in the present downtrend.
Materials: Nifty Metal was in an Uptrend Under Pressure during the start of the month and ended it in a correction. Over the month, the index fell about 6.5% on heavy volume. Continue reading “Industry Update: October 2018”
Current Market Status
The earnings season has been muted so far and Indian markets continued to remain in a Downtrend. All sectoral indices ended in the red (as of friday), except NIFTY Realty (+0.53%), which registered nominal gains. NIFTY Pharma (-5.5%) was the worst performing sector heading into the earnings season. Continue reading “Market Condition and How to approach the markets this week?”
After a prolonged uptrend throughout 2017, the Indian market turned extremely choppy since late January 2018. Amid a variety of factors ranging from a global trade war to the current liquidity crunch in the Indian debt market, the Indian stock market has been extremely volatile this year. After a heavy sell-off in the broader market during February-March, the Indian market recorded a follow-through day on April 5, allowing us to put the market back in a Confirmed Uptrend. While the earlier plunge in the Indian equities would have kept many investors away from the market, we relied on our time-tested market direction model to spot trend reversal. We made good use of this period to make some decent returns on high-quality names such as Bata India (+24.7%), VIP Industries (+16%), Reliance (+20.4%), Page Industries (+23.3%), Britannia Industries (+24.2%), Bandhan Bank (+21.4%), Bajaj Finance (+21.9%). Nestle India (+17.6%), Astral Poly Technik (+14.9%), and Kotak Mahindra Bank (+12%). Of course, it was not all hunky-dory as we made losses during this period but managed to limit them at 8% thanks to our risk management method of following a strict stop-loss.
While the market kept hitting new highs, we remained cautious in our approach, enabling us to book regular profits in the above names. Also, the method of keeping a count of heavy-volume down days also known as distribution days helped in spotting weakness building in the market. This allowed us to keep emotions aside while moving the market to Uptrend Under Pressure on September 4. Now, we could have easily avoided doing that by considering that the Nifty and the Sensex were just 2% away from their all-time highs. That said, we took the build-up in distribution days seriously and with the distribution count reaching five on the Sensex and four on the Nifty, we alerted our subscribers to get more vigilant with their dealings. Over the next six sessions, we brought down the number of stocks in our portfolio to just four from the earlier 14.
Now, we had to take some hits along the way by booking losses in some names. However, our method has served us well on the downside also, looking at the levels at which some of our removed stocks are trading today.
The popular life quote of No Pain, No Gain applies in the stock market as well. You need to be willing to take small hits to make it big in the market. Capital preservation holds key in the current market scenario. This will allow you to stay in a position such that you would be able to capitalize on a strong market uptrend as and when it begins. As always, we will be keeping a close eye on the daily market action and will alert users if we see buying interest coming back in the Indian market.
CEO, William O’Neil India
What is a Base-On-Base Pattern?
Was Rahul Dravid a better captain than Sourav Ganguly? What about the other Rahul – Can he become India’s Prime Minister one day? And can base-on-base patterns produce a superb breakout?
People might disagree on the first two questions. As for the third, the answer is an indisputable “yes.” Continue reading “How the Base-On-Base Chart Pattern Etches Superb Stock Gains”
Rahul Dravid rarely chased balls that were outside his hitting zone. He happily left deliveries that could have troubled him.
Investors should not chase stocks that do not meet their buying criteria. Until and unless such stocks meet your buying criteria, it is best to leave them alone.
Dravid was a man of process. He knew his strengths and weaknesses and stuck to his style of play throughout his cricket career.
Investors should follow a process and stick to that both during good and bad times.
After 15 years of international cricket, Rahul Dravid hit three centuries in the 2011 Test Series vs. England. On the same tour, he made his T20 international debut at the age of 38. And guess what? The young lad smashed three consecutive sixes in that innings. The man never stopped working on himself.
Investors should not get disheartened if things don’t go in their favour. Instead they should analyse their past investments regularly and identify things that worked for them and the ones that did not. The focus should be on continuous improvement.
The above are few important lessons that stock market investors can learn from one of India’s greatest cricketers. We wish Rahul Dravid a very happy birthday.