Tuesday 2 August 2016

Time to be cautious

NIFTY: Near 8700
SENSEX: Near 28000

As earlier post was really short here I am writing this for better understanding of what I mean.

Nifty at current levels is near 24 p/e, US Index S&P 500 at current levels is near 24 p/e too. For any index, 24 p/e cannot be value territory for investors. Couple that with the lack of sufficient earnings growth in the market, It becomes ripe for a crash. We have so far avoided the crash because World Economies are printing money and sustaining their Economies, That is what US QE is (layman wise) and now they are going towards Hiking instead of Easing. We have a very strong Government at Center, We can see things improving after decades of misrule but the problem is at the Global Front.. Even US elections are around the corner and if Donald Trump sails through which I feel is possible, He is not much liked by the markets. Having said that, I would avoid making a DOOMSDAY commentary here which actually is a probability but no one can time it, I would suggest Investors to stay focused and Investment or Portfolio wise go behind stocks which are seriously in the value territory rather than buying bloated names at astronomical valuations because when Market cracked last time, Mega Bull Stocks like Educomp got finished while under valued stocks went under correction to emerge as a Multibagger in the Future. So Investors should be very cautious in the market right now.

What is at 24 P/E might go up further and trade at 28 P/E but I hope readers understand the Risk and Reward here. Disclosure: I Look to increase small position out of profits in Nifty 7000 December Put which is trading at Rs 25 right now. Hypothetically If Global Markets crack 30% and we follow suit, Nifty could get close to 6000 and in that case Nifty December 7000 Put should trade close to 1000, That is if anything of that sorts happen by December 2016 Expiry, Otherwise it is going towards ZERO so All in All its a Total Gamble with 100% risk and with low "probability" of returns buts thats just a Small Trade with Reward in favorable situation being really good.

Monday 1 August 2016

Time to be cautious

Nifty is trading at almost 24 p/e, S&P 500 (US) is trading at near 24 p/e too.

We have events like USA Presidential Elections coming up, Donald Trump not liked much by market.

We are not under valued at current valuations and markets do come back to undervalued territory.

While experts are going berserk with SENSEX 1,00,000 by 2020 views on the street I think investors should adopt a cautious approach right now and buy only really undervalued stuff rather than investing in risky companies, I am not saying time to Panic Sell but just be cautious because it is better to be safe than sorry.