Friends,
Shankar Sharma of First Global said that overall trend in market is still down and the rally from 12,500-15,000 is over and done with. He feels that the sharp oil price correction is likely and India will be a big beneficiary from the same. According to him, India will benefit from fund reallocation in Emerging Markets, or EMs if crude cracks. He feels that the markets may slip to 10,000 levels this year or early next year and may then start moving up gradually over next three years. He sees the Sensex bottom within the 10,000-12,500 range. He believes that the market could double from lows but that may be short-lived.
According to him, valuations of BHEL, L&T is still expensive. He doubts further stellar returns from SBI and feels that the rally is over. RIL may drive the next leg of fall in the market and could test levels substantially below Rs 2,000 per share, he said. He doesn't see much downside for IT from current levels.
Sharma said, "Nothing has really changed. The GDP numbers have come in confirming our fears but this is just a recent set of numbers. We don't know what lies ahead. Overall the trend is down punctuated by the rallies we keep seeing. When I say bull market, I mean taking out the highs and continuing to the path of 25000 and beyond. Markets could reach 18000-19000 - that rally is still to be played out. So, markets can double from lows but that still won't be a bull market. It will coincide with crude having come off, some talk of political certainty because inflation has cooled off. That rally will propel markets close to 20,000 but I doubt if that will be so quick. Crude has to come off substantially at USD 80-85 per barrel. Our case is it will and may take 12 months to get to the USD 50 per barrel levels. Crude may rally 10-20% from its lows. When it hits USD 50 per barrel, you will see India begin to come back on its own."
overall trend in market is still down and the rally from 12,500-15,000 is over and done with. He feels that the sharp oil price correction is likely and India will be a big beneficiary from the same. According to him, India will benefit from fund reallocation in Emerging Markets, or EMs if crude cracks. He feels that the markets may slip to 10,000 levels this year or early next year and may then start moving up gradually over next three years. He sees the Sensex bottom within the 10,000-12,500 range. He believes that the market could double from lows but that may be short-lived.
According to him, valuations of BHEL, L&T is still expensive. He doubts further stellar returns from SBI and feels that the rally is over. RIL may drive the next leg of fall in the market and could test levels substantially below Rs 2,000 per share, he said. He doesn't see much downside for IT from current levels.
Sharma said, "Nothing has really changed. The GDP numbers have come in confirming our fears but this is just a recent set of numbers. We don't know what lies ahead. Overall the trend is down punctuated by the rallies we keep seeing. When I say bull market, I mean taking out the highs and continuing to the path of 25000 and beyond. Markets could reach 18000-19000 - that rally is still to be played out. So, markets can double from lows but that still won't be a bull market. It will coincide with crude having come off, some talk of political certainty because inflation has cooled off. That rally will propel markets close to 20,000 but I doubt if that will be so quick. Crude has to come off substantially at USD 80-85 per barrel. Our case is it will and may take 12 months to get to the USD 50 per barrel levels. Crude may rally 10-20% from its lows. When it hits USD 50 per barrel, you will see India begin to come back on its own."
My Comments:
SS use to say in past that I wouldn't like to speak the levels.Now he talks with levels....
I don't understand when he says,
" The GDP numbers have come in confirming our fears but this is just a recent set of numbers. We don't know what lies ahead."
when he himself says that Oil can come to $50 in a year.....I think he doesn't mean it will come down to that level in 3 months(last 3 months).Crude if he says can come down to $50 then it will come down gradually.....and when he discuss the recent sets of no of GDP, he forgets that these are figures of $140 crude and not even $115 crude.....and as we all know market use to discount bad news and its effects 6 months ahead as we saw in last 6 months, market will also start discounting good news 6 months ahead...
Actually I am not able to understand what he means by saying ......"We don't know what lies ahead..." if crude is going to come down which is seen even after the the Gustav Tornado in USA which would have create a cascanding effect and would have took the crude to above $150-160 levels....but instead crude tanked by over $4...then the slow down world over and inflation is going to come down in next 6 months......then how SS is questioning ......"What lies ahead?......whatever lies ahead is going to be better then last 6 months.......that is what can be derived from the crude tanking........it is ofcourse is the biggest reason for the markets to go in tail spin......
If market discounts bad news 6 months ahead , about bad results and poor GDP and IIP nos which we saw from 21k to 12500 ,then market should and will discount good news 6 months ahead......
Let us see, how market discounts .......good news!but if market is going to discount good news 6 months early...then we should see no more leg down below 12500......
It will be very interesting to see from where markets starts discounting the good news ,from Sep/Oct/Nov/Dec or .......when..(fill in the blanks)..............!
Rajeev
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