Friday, May 18, 2018

morning thoughts...

Once again the markets continued to trade side ways and range bound with pressure on indices and activities in midcaps , our timely shorts in advance nifty and bank nifty and put options of the same has done extremelly well.
Now will the markets slide more , more steeply or will give a bounce back , we are already in with the positions in index and options
Now we put in some datas of the year with similarity to 2008 where the success of ipos have been around 90k crore of fund raising from the primary market which has doubled from the year 2008
The current PE ratio of the Nifty is 25. It has been found that whenever the Nifty PE ratio went beyond 22, its three-year returns turn negative, and while investing the further you go up on the PE scale the greater is the damage. Historically, the index generates substantial 3-year returns ranging from 21.18% (PE 20 – 22) to 152.10% when it is less than 14. Thus, to generate positive returns, the PE should fall further by 12 – 20% from the current levels. This means that even if earnings were to grow from here it won’t translate into higher stock prices
The previous years of steep and mega falls were associated with scams and this year is also associated with a big financial scam and drop out
So can it be seen that nifty will retrace to 3 years low to retest  7750 in a steep manner with bank nifty retesting 16777 in coming months
Will the pe continue to gain along with markets and nifty strike 12500 with bank nifty 35000
The picture is clear and once again we have taken mega positions for dual phase nifty and bank nifty
Ist phase is intermediate positions for the volatility and nominal moves and the 2nd phase position is for the mega move bound to come...
It will open huge doors for options in index and stocks and can be seen as the best period and year for options as unexpected moves will come in same
Volatility will be at peak so small stoplosses will be flirted with in both cases even if the call direction is correct, we have been upbeat on stocks like jindal steel , tata steel , hexaware in our jackpot series for a good move , however the markets have not supported yet after the initial rise , however the art of managing it with volatile moves will give unexpected returns