India’s Growth Story in 2019 and beyond

The direction of the market will be decided by many factors and events that will take place in 2019. We all know that 2019 is the year of General Elections in India. If the current NDA government regains power in the center, the market will fly like a rocket. But if it fails to achieve majority or there is a situation of Hung Parliament, we will see huge fall in the market within a very short span of time. Apart from that, our market will be derived by micro and macro Socio-economic and political scenarios developing in our country and in the world as a whole.

The World Bank has forecasted that India’s GDP is expected to grow @ 7.3% in the Fiscal Year of 2018-19 and an average of 7.5% in 2019 and 2020. It is expected that India will remain the fastest growing economy among leading economies of the world. In the same period, China’s GDP growth is expected to slow down to 6.2% in 2019 and 6% each in 2020 and 2021 as per the January 2019 Global Economic Prospects report released by the World Bank. This slowdown of Chinese economy is also expected to be boon for the Indian Economy.  The CSO of India has also predicted that India’s GDP growth rate will at 7.2% during the financial year 2018-19.  A survey has also been conducted by the PwC-FICCI among the India Inc. during July to October 2018 which reveals that India Inc. is very optimistic about Economy and expects over 7% growth in economy during next 12 months. This expectation is in line with the other institutions like World Bank, IMF and the CSO of India.

Key factors driving confidence in growth expectation is backed by strong domestic consumption, under control inflation, which is expected to remain near the mid point of RBI target rang of 2 to 6 %, strong Public Sector driven infrastructure, Continuous reduction in Current Account deficit which is targeted to be at 2.6% in next year. Indian Economy has now come out of the turbulence caused by demonetization and implementation of GST. Demonetization and GST have forced many unregulated and unauthorized business to come into main stream. This helped the economy to become more robust. Gradually Indian Banking and Financial system have embarked on a path of cleaning themselves and as a result more hidden filths are coming on the surface. This will eventually clean the system and issue of NPA will be solved. Although, it will take some time to feel the change.

Capital market of any country is considered to the mirror of economy of that country. It shows the actual health of the economy. The growth story of Indian Economy is also going to be reflected in Equity Market. We will try to understand this through the analysis of Indian market.

On 11-01-2019 India’s benchmark Index of 50 largest companies in terms of market cap, NIFTY 50 closed at 10794. Last year in 2018 market touched its all time high at 11751.8 in September and after that came down sharply to the level of 10004.55 in just over one and half month making an overall correction of 14.86% from its top.

We have already seen that the leading markets all over the world witnessed correction during the last year due to various reasons and our Indian markets also followed the trend in similar direction. But it is point worth to be noted that Indian market corrected least compare to the other markets. Now the question is, what will be the direction of market in the New Year? Whether it will correct more or will move in the upward direction and made a new high…..

Above is the NIFTY Monthly Chart from its inception in 1996. We can see that NIFTY is continuously moving in upward direction from the late 2003. The only major correction we see in 2008 that came due to global recession and many incidents took place in the world like Sub-Prime loan crisis in the US due to which banking giant like Lehman Brothers fell down. Due to these incidents Indian economy also faced the situation of slowdown. But recession never came into the Indian economy.  Apart from this, Indian economy shown constant growth and it is hoped that it will keep growing further in coming future with some technical corrections in between.   

The movement of market in 2019 and in near future can be understood with the technical analysis of NIFTY Weekly chart which is present below. From the analysis of below chart of NIFTY it can be said that a “Head &Shoulder Pattern” is in a process of making. By the Elliott Wave Analysis of the Chart, it is clear that five wave motive wave has been completed and period of  short term correction of A-B-C is underway from the top made in February 2018 and we are in the middle of this correction. This correction will be complete near (C) which is around the level of 9330-9375 and after that, the market will move strongly in upward direction. The ongoing correction should be completed within 4 to 6 months time frame from today. So this is a very good opportunity for investment for five to seven years in order to getting multi fold return. This technical Analysis also backed by our fundamental Analysis of Indian economy.

Some of the sectors like infrastructure, consumer goods, auto, cement, pharmaceutical, and power will lead the market in manufacturing sector, whereas IT and Healthcare will outperform among service sector. Systematic Investment Plan (SIP) will be the best strategy to invest in the market.

-:Neeraj Dinmani (Neeraj Sinha)

 9308944066, 9431458941

DIRECTION OF WORLD MARKET IN 2019

We have entered 2019 almost a week ago. Everyone who is interested in capital market investment have a concern about the direction of equity and commodity market direction in the year 2019 and economic scenarios all across the world and specially in India. Last year 2018 was the year of correction all over the world. Most of the important indices of the world market witnessed correction from their upper levels. Dow Jones of the USA corrected almost 19.5% from its top in 2018, Britains's FTSE100 corrected 17.29%, Germany's DAX corrected 24.4% during the last year. Among Asian major markets, China's Shanghai composite corrected 31.34%, Hang Seng of Hong Kong witness 24.09% correction, Japan's NIKKEI corrected 22.49% and our India's NIFTY witnessed a correction of 10.35% during from its top in 2018. We can see that our Indian martket seen the least correction among all the major indices of the world.

In the year 2019 the macro economic scenario of the world is going to be affected by some of major world incidents. US-China trade war is still going on, Post Afghan scenario after US exit, slow down of Chinese GDP growth, Trump's immigration policy etc. Back home in India, 2019 is a year of general elections. Its impact will definitely be seen on the direction and volatility of market. Currently NIFTY is trading at around 26 multiples of P/E, which is quite higher and indicating that the market is overvalued. (the detailed analysis of Indian market in 2019 would be posted seperately)

Neeraj Dinmani (Neeraj Sinha)

9308944066

A FAIR OVERVIEW OF UNION BUDGET 2014-15

Yesterday, on 10^th of July 11, 2014 union finance minister Mr. Arun Jaitley presented the maiden General Budget of the new BJP(NDA) Govt. for the year 2014-2015. Entire nation, including General Public, Business Establishments, and Market as well, was waiting for this budget. Every year people wait for the Budget as if it is going to make a dramatic change in their life overnight. This is mainly due to hype created by the media. People are mostly interested in what is going to be dearer, what is going to be cheaper and what change has been made in the Tax slabs. In the nut-shell it can be said that general people are concerned only with the matters which are of their regular interest. But the Budget is a financial plan of the Union Govt. for a year. It means, the Govt. makes plan of its sources of Income and places of expenditure for the next one year. With the planning of expenditure it provides a road map for future developmental activities that are about to take place. 

Now let’s come to the yesterday’s Budget and its announcements. The different political parties analyzed it according to their convenience. Govt. supporters praised it and opposition criticized it. Which is quite natural and we have, as a professional, nothing to do with that. According to me, as a Finance and Capital market professional, Union Finance Minister Mr. Jaitley has made some little but very important announcements that will have a long term impact on investment scenario. Some of the decisions are :

      The Govt. has made provision to have single Demat Account and KYC for all type of securities related investment. This will make investment a convenient and hassle free activity. Like Mutual Fund, there will be REIT Fund. It will provide small investors an opportunity to invest in Real Estate Sector that was the sector. This will also encourage the investors to invest their money in different diversified places like Mutual Funds, Direct Equity, etc. Apart from that, bringing back KVP (KISAN VIKASH PATRA) is also a good decision. It will attract the investors towards Post Offices and will benefit the agents as well who were having tough days in recent times.

      The BJP(NDA) Govt. has given its biggest focus on Construction. Rs. 150000 Crore has been allocated just on construction. Rs 7060 crore has been allocated for the development of 100 smart cities. Rs. 37880 crore has been given for Road construction. The repayment period for the infrastructure finance has been increased from 10 years to 25 years. The decision of developing 100 smart cities around major cities is going to have a huge impact on the economy. I think the Realty and Infrastructure sector is once again about to enter into a Boom phase. We have seen that Realty sector has been facing recession for the last few years. This was mainly due to difference between demand and supply. The below given chart will make it clear. Now it is ready to take off. So the “ACHHE DIN” of this sector is about to come. So stock of Stocks of good realty sector companies can be added in the portfolio for a long term point of view. It will give handsome return. Both Fundamental and Technical Analyses are suggesting this.

With the Realty sector, there are many ancillary industries are associated. Like Cement, Steel, Transport, etc. These industries will also see smart growth with realty sector. Apart from that, other sectors like telecom, road, healthcare, etc will also get boost. Jobs will be flooded in infrastructure and construction sector in the coming years. I think only construction and infrastructure sector will provide about 75 to 80 lakh jobs in the coming 5 years.

      The Finance Minister has also announced some incentives like tax holidays for power and energy sector. This is another sector that is needed major attention. We need that India is a growing economy and without energy, no developmental activity can take place. So apart from tax incentives, smooth supply of fuel should be ensured. FDI in Insurance and Defence has been increased from 26 to 49 percent. I think this is a good and much awaited decision. We are well aware that our defence forces are facing acute shortage of equipment and technology. With the FDI, new technology will come to the defence establishments and job opportunities will be created as well.

      Now let’s come to the Banking and Financial sector. We know that Banking and Financial sector is the Engine of all the sectors. It provides one of the 4Ms (MAN, MACHINE, MATERIAL &MONEY) that are essential for any business activity. If any sector gets sick, one sector that gets worst affected is Banking and Financial Sector because entire burden comes on that and its profitability erodes. In the recent days Banking sector has been worst affected by the poor performance of Realty and power sector. Now when we are seeing a turnaround in these sectors, we can hope turnaround in the banking sector as well. That’s why we have notices huge jump in some infrastructure financing companies like IDFC. Some decisions have been taken like two bank accounts for every citizen with Public Sector Banks will also increase the penetration of banks and achieve proper financial inclusion goal and increase of employment as well. The PSU banks will get 2.40 lakh crore to finance the business entities.

I think these are some steps that will show their impacts on the economy in future in positive way. In this Budget, minor relief has been given in taxes and major focus is made on economy.  As far as market is concerned, it is in the pressure of profit booking due to non fulfillment of expectation at the taxation front. But in the longer term, it will be positive.

:-NEERAJ DINMANI

CHAIRMAN & MANAGING DIRECTOR, 

EDMAX TECHNOLOGY PVT. LTD. &

EDMAX INVESTMENT SOLUTIONS  

Email id- dneeraj@edmax.in, cmd@edmax.in

Website- www.edmax.in

Mob.- +91-9308944066, +91-9431458941

STOCK RECOMMENDATION FOR MEDIUM TO LONG TERM

For medium to Long term perspective, two stocks are looking very attractive to me on the basis of Elliot Wave Study. The first is LIC HOUSING FINANCE AND other is CENTURY TEXTILE. Both these stocks have embarked in their crucial "Third Wave" journey which is supposed to be the longest wave in the five wave series. So, both these stocks can be added in the portfolio for the above mentioned time frame. One should maintain the Stop Loss of 248 in Century Textile and 196 in LIC Housing Finance.


 

                           Daily chart of Century Textile

                          Daily chart of LIC Housing Finance




Happy Trading
         :-Neeraj

Buy COAL INDIA

Buy COAL INDIA for medium to long term (min for 6 months) with the stop loss of 260. This particular stock can cross the price range of 350 in the coming future.

-:Neeraj

Short Covering is over for the market (NIFTY)

Today we saw an end of the covering that was taking place for the last 3 sessions. 6210-6220 is a strong resistance zone for the market which is respected by the market. Now as the market has completed it Short covering we can see another downward movement for some time which should go below the level of 5975 if everything goes as per the chart pattern.

SELL TATACOMM FUTURES (NOV)

Sell TATACOMM (November Futures) for short term with a target of 245 and stop loss at 285. This particular stock is ready for the downward movement.

Regards:

Neeraj Dinmani

EDMAX Investment Solutions,

Phone- +91-9308944066, +91-9431458941

Email- dneeraj@edmax.in, dneeraj1611@gmail.com, dneeraj1611@hotmail.com