Afternoon D & C Dedicated To Mumbai
Home > Business & Investment > Stock market may perform in 2019

Stock market may perform in 2019

Monday, January 07, 2019

Mustafa Nadeem, CEO, Epic Research

This year, we believe the markets will have certain headwinds rather than sailing easily throughout the year.  Firstly, with our analysis, there is a cyclicality in volatility but this tend to erode around major economic or macro-economic event and a much bigger cycle takes the front seat. In past we have seen volatility heightened usually 2 months prior to election and settles down post election as dust settles. Hence any short term or medium term investor should avoid investing with short term or medium term perspective, as; volatility may hurt the overall returns. The important point here is that post election as it settles down the long term trend remains intact and the overall bullish nature of the market unfolds itself for long term investors.

Keeping above analysis in mind, we believe the market is likely to be in consolidation going forward with some correction that can bring down the valuations to a cheaper level. Risk aversion will be the flavor.

In the backdrop we need to understand there are certain factors that are important as a cue to discount the overall movement. The negative factor for Indian market is the negative global markets which are off their peaks and trading at 1 year lows. The expanded volatility by 80 % from last couple of weeks has already put global sentiments in a negative perception.

The favorable factor with this year end and next coming is the appreciation in the INR and Crude oil prices. INR has appreciated almost 7% in last few weeks while crude has dropped almost 44% from its recent peaks which is a most important factor. This will have significant impact on CAD.  

Keeping above perspective in background, Equation seems to be positive for a long term i.e. while in short term or medium term perspective like 3- 5 month we expect a rise in volatility that can dampen any directional move.

For a short term perspective we expect market to be in range with upside capped at 12000 while on downside it has support placed at 9450. Hence with our analysis many things are looking to work out in favor of Indian economy in medium to long term view. Any decline from current level which is more than 10% should be utilized by investors to add quality stocks with growth potential and once the volatility settles down one should keep investment horizon for longer term. As In long term risk adjusted returns tend to be better. While we do suggest to not to be aggressive in initial quarter of 2019 or 2nd quarter as well. One should be having systematic approach with overall strategy to be scattered.

Investors for 2019 should understand that any dip is useful when it is more than 10% in a secular bullish market. This helps to bring cost lower and pyramid the portfolio for better returns.

As far as timing is concerned, we believe Post June we expect smoothness due to easing of volatility and pick up in investment cycle. It all comes down to mandate of people in LS 2019 as well.

The road ahead for Nifty/Sensex in 2019 seems to be accommodating volatility which has been cyclically down for the last couple of years.  While Volatility has been the curse for 2018 as the year started with its expansion and since then we have seen Nifty volatility expanding in a gradual manner, up 68% in the last few weeks.  With Events, ahead of us such as LS2019 and global markets continue to break important supports we expect the headwinds will be there. Though on the other hand, we have crude which is around $42, below $50 mark, which is a boon for Indian economy hence we will see bulls try to make their way out of it. For Nifty the range seems to be 12100 on the upside to 9400 on the downside. Sensex, on the other hand, may oscillate between 39800 to 32300.
Stock recommendations for 2019
1.    SBI – The stock has shown some strength in last few quarters while on a long term chart it is in a broader consolidation range of 330 – 260.  It continues to be a leader in PSU space and we expect outperformance from this bank in coming quarters with its growth potential as improved BS in last two quarters. We expect it to be a good pick with upside potential of 20%  i.e. 354

2.    Yes Bank – Stock has seen its worst correction in last almost 10 years since 2008 financial crisis and is hovering at very important support which is placed at around 150 levels. We expect stocks it to be a bottom in medium term and stock is showing signs of bottoming out in its pattern. We expect an upside from present levels in stock of around 25% i.e. 225

3.    Vedanta – Stock after a due correction in 2018 has turned flat in a consolidation range. The important support for the stock is around 170 – 166 levels and with recent consolidation an upside momentum for medium term can be seen with target of 240 – 250.

4.     M&M fin Services – Stock is in a bullish momentum with its trend primarily intact. A recent dip was seen but it resumed the uptrend and is trading near its all time highs which is around 500. We expect the trend to continue and stock make new highs in 2019 with upside target of 560 – 570.

5.    Wipro – The stock is from IT space and is performing well since 2017 making higher tops and higher bottoms after ending its two years of correction that started in 2015. Stock is trading near its 2015 highs of 340 levels and given its strength we expect it to continue to be in uptrend with higher targets of 390.

No Comments Posted
City news
Focus on Agriculture, Jobs, Infrastructure and Di
Under flak for scrapping internal assessment mark
In an interesting case, the Communist Party of ...
I am really very uneasy and disturbed. I started
Dr. Rajan B. Bhonsle, M.D. (Bom)
Consulting Sex Therapist & Counsellor
Dr. (Mrs.) Minnu R. Bhonsle, Ph.D.
Consulting Psychotherapist & Counsellor
Select Sun sign:
Aries (Mar 21 - Apr 20)
Aries (Mar 21 - Apr 20)You are likely to remain careful and watchful today, foretells Ganesha. And because you'll be invited to parties and other social events, your enthusiasm will remain buoyant. You will also strike the right balance between business and pleasure, says Ganesha.
- Advertising -
Recently, Madurai High Court Bench expressed alar
The development of transportation and telecommuni
A national campaign to touch-base with 50,000 rur
Read More