17/04/2021
Good Weekend Read!
No change in our Nifty target of 15900 over next 60 days. This week again Nifty moved in the range of 15000 and 14300.
Yes, 15000 is a big psychological barrier whereas 14000 is the biggest psychological support. That's why bears are trying to attack market time and again to break the channel....
Market is more worried on covid spread in the second wave. Every second analyst is busy taking stock of ground reality. They believe, by and large, the consumption will take a big hit. Particularly, sectors like auto, cement, steel, textiles, banks and NBFCs. The last 2 will be on account of no credit offtake. Cement, steel, auto sector is believed that dealers will not lift delivery and retail will halt consumption. They also believe that national lockdown, if any, could fuel to fire.
Market knows it all. Yes from 15000 market kept on falling towards 14300 for at least 9 times in last 45 days. Yet at lower level, strong buying comes and Nifty bounces nearer to 15000 levels. This will happen even next week for sure.
This reminds us of March 2020 and April 2020 where we saw Nifty falling to 7500 followed by huge volatility. Same breed of analysts were puzzled and tried to short market and you know what happened. This time too it is not different except the method of conviction.
It is said that the Covid spread across the country is massive as it crossed 2 lac cases per day. There are shortages of beds and vital injections coupled with oxygen. This is giving a vast inpression that there is no option but to lockdown.
We want to analyse these issue in some other manner. There is no end to become pessimist. Please note last time Covid-19 was under control as only Narendra Modi took all the decisions which at that time were timely. Now at least we can realise his efforts when we saw states failing time and again. Chhattisgarh allowed 60 to 70K crowd for watching seniors T-20 knowing that covid can spread. Gujarat did same with the test matches. So also Tamilnadu. Then comes elections in 5 states followed by Kumbh Mela in Haridwar. Now please note that when in a marraige 50 persons are not allowed, then gathering of lacs in the events stated above were bound to see spread of corona. All those states pitting restrictions on public ought to have followed the rules themselves if their intention was to not spread Covid-19. Which state has expanded facilities sensing that this will happen and the answer is really none. The height of stupidity could be controlling pvt hospitals, distribution of ICU beds and remedesivir which has in fact added to the woes and media got a chance to balloon it out. If hospital charges more or pvt pharmacy sells remedesivir at profit it is at least available due to huge network. With Govt control, hospital says we will provide only to the admitted patients and many are struggling to get even beds hence there is sudden rise in deaths all over the country. Well this is not our subject and you may differ with our views.
Lockdown now is decided at the state level and every state is announcing it keeping in mind their revenue stream. So there will be partial lockdown and not complete. The fact remains that we are doing 3 mn vaccination a day. With Sputnik V, Moderna and Pfizer coming handy in manufacturing vaccines and Hafkins too playing a vital role, we believe it will cross a crore vaccine a day within next 4 to 6 weeks. That also means we should reach 60 70 crs vaccination in the next 3 to 4 months.
The current phase of short selling when compared to 2020 suggests that there is another opportunity like in 2020. We will see Nifty
rise to 15900 then 16600 very fast and short covering will add fuel to the rally. The reason behind our belief for this is extremely robust nos of March 2021 quarter. There was no serious covid in March 2021. The covid outbteak is seen in April and there is no complete lockdown any where including the financial capital, Mumbai. People believe it will come after 2nd May post election results though we do tend to be different from our views due to the massive successful vaccination drive. 70 crores of the Indian population and may be even up to 100 crs of them will get vaccinated sooner than later and the remaining 30 - 35 crores may never require vaccination. We should be almost through then. By the time you realise the impact, if any by July/August end one will not survive short-covering.
Now there are some smart players who know that big shorts are happening. Taking advantage they are keeping market volatile and adding positions at will. They know for sure market will not come to know the impact if any of lockdown until July 2021. By that time Nifty will be past 16000 and no one has guts to keep short open till July end. We have seen Tata Steel rising 25 pc in just 45 days. This will happen with many stocks in steel, cement, banking, NBFCs and auto Another example is of Tata Motors which announced closure of Pune plant and still the stock rose from 285 to 315.
Also keep in mind when you long max is the value of long but if you short the answer always is infinity.
You must realise that Govt is the largest consumer in steel and cement. They can do more QE to lift consumption. Large projects will not get affected. Large players always have 30 to 60 days inventory and hence small lockdown, even if happens, will not impact the economy. Please note all projections made for FY 21 by all white collared so called experts had failed miserably. We do noe see major impact on FY 22 also.
Now the best part is liquidity due to QE. This will rise more if economy gets affected hence market will have to rise. Mind it steel cos raised prices from 1500 to 4000 pt even when they knew there is Covid-19. In 2020 we saw complete standstill in April/ May yet Nifty rose from 7500 to 15000 and no one even realised. Now there is no complete lockdown. The Nifty may not give 100 pc rise but surely we see 15 pc rise in next few months.
MARKET KNOWS IT ALL...
Nifty should have fallen to 12500 by this time which lot of bears are expecting. But in fact Nifty is bouncing from the lows every time. Once we close above 15000, the new orbit will start which will make bears go for hiding.
Sectors which should benefit from lockdown are entertainment industry like Zee, data companies like Bharti, JIO and pharma sectors which should have outperformed in last 3 weeks but which has yet not happened. TCS, Infosys, Tinplate reacted on good results which means market works only on demand and supply. Having seen large short selling we only believe to continue with out bull market thumb rule BUY DIPS instead of playing either side.
