The Nifty - where is it headed? Aug 2016

About 6 months back, I had called out that the markets could be on the way down, and my target was 6800. If it were to have broken down then 5500 could have been hit effortlessly.

Sure enough, the mkt went down to 6850 or so, but then has bounced back very strongly, from those critical support levels, and has been hitting 52-wk high , of late.

I am sure those of you who had stayed in the mkt or had trade for the short term, would have made great money in this period.

Where is the mkt headed from now on? Let us look at a few big factors:

1. Monsoon has done well so far. Reasonable good. As long as it does not flood the whole country, we should be in for record kharif harvest. Pulses remain a problem and will take long term mesaures to fix. So, with a decent monsoon season, the first worry is out of the way. Rural consumption should be decent enough.

2. Inflation continues to be well under control, and so, expect interest rates not to rise, for the next 3 to 6 months. This means, there will be enough interest from DIIs in the stock mkt.

3. Rupee is stable. Also, growth in other mkts has practically shut off. While Brazil mkt has risen spectularly ( much more than the Indian rally) , riding on the Olympics, their fundamentals continue to be shaky. China will take some time to digest their excess investments and clean up the balance sheets of their banks. So, there is hardly any interest there. The other mkts are practically going nowhere. Plus, money at near-zero interest rates is available in many developed markets, and if the exchange rate can eb held stable, then expect decent inflows from the, These factors, put together, will keep the FII interest in the Indian markets.

4. One potential risk is that historically, the election year in the USA has been a disaster for their stock mkts, and by deduction, the global stock mkts. If that happens , India wont be spared, either. But for that to happen, there is need for a trigger - economic , political or geopolitical. Until then chances are that the markets will rather go up than down.

5.Valuation-wise, based on 2016-17 earnings, the Indian markets are already into bubble territory in terms of valuation, with forward PE of more than 24 ( historical at 18-20) . But with liquidity governing the mkts now, I wont be surprised if the mkt goes up to a PE of even 30- until some geopolitical event pricks the balloon.

For long term investors, none of this should matter, as long as they are invested in long term stocks. Would I add to my positions now? No, I will wait for the mkt to correct.

For traders, I think in the absence of any " event", mkts are headed higher for the short term, until the balloon bursts. Stock specific traders could turn out to be sexy for the punters.

Kabali Mania(c)

The social media is full of people with different reactions to this crescendo called Kabali. Let us look at a few types of people in the social media, in the context of release of this game-changer movie, and their instant reactions online:

1. The " me first" types - anxious to post a selfie from the cinema, with a cone ice-cream in hand, real-time. The ultimate display of oneupmanship. That smirk in the face would say - "Hey, I climbed Mt. Kabali without oxygen! Before you. I am always great!" For them, first-day-first-show is a status symbol.
2.  The "my review first" types - equally anxious to post the news of their "Kabalidom" . Masquerading as film critic, writing a few incoherent lines that are supposed to be a full review, but ending up with only one nett message - that same " I SAW KABALI BEFORE YOU".
3. The " I-wish-I-were-first" types - the ones who scoff at the mad rush for the ticket to heaven- er, to Kalabi- and tweet " I ain't in a hurry. There is no need for this hype. Will do the honours later". In reality, they may well be cursing either their luck for not badge that badge of honour in time, or their plain incapacitation to do that.
4. The "I-went-too-but-wasn't-worth" types - usually pontificate the futility of such mad rush, and try and portray as if they were rather unemotional in watching the movie this soon, but in reality, were equally anxious to be seen with the early birds.
5. The " I-was-there-but-the-movie-was-a-total-waste" types . These are people who, in reality, easily fall prey to hypes around movies, and are suckers for first day first shows, but try to deliberately play down the quality of the movie, for sheer fear of being seen as protoganist of a low-grade movie. Their "I-am-THE-intellectual" badge will never permit any open admission of being a Rajini fan. In other words, they secretly drool at the prospect of a Rajini potboiler, but the mask on their face would read " I am really level-headed, you see?"
6. The " I-will-never-be-there" types. The ones, whose "intellectual" tag will not ever permit admitting their craving for this same deluge, will stay away for some time, but then, at some point will quietly give in, queue up, pay up and surreptitiously watch the movie nevertheless.
7. The " I-dont-care" types . They will never yield to temptation,  unlike Adam to the apple. Will wait patiently for 6 months at the minimum, and watch on TV or Deepavali or Pongal day. And then vociferously perform a critical review of the movie - at a time when the rest of the Janta would have had moved on to at least two more new release hypes.
8. The "I-will-be-there-but-at-no-cost" types. Some of them will not wait , and would happily buy either a screenshot video from a theatre, at Rs.50 on the roadside, or watch the same trash copy on "tamillotus.com", and with red eyes, type away fast and furiously, their view of the movie. The other "tech savvy" will wait for a good DVD rip on torrent, and often wont betray their stealth mode of watching.
9. And then there are those few Tamilians, who clearly feel embarrassed calling themselves Tamil, and would anxiously proclaim " chee! I seldom watch Tamil movies! Only Hollywood or Bollywood movies, you see!"
   
   So, which of these categories do you belong to?