Being a student of historical cycles study we are strong believer in notion 'history rhymes if not repeat'. Like most Analysts We do NOT think we will see repeat of 2008 wherein market crashed to 7700 in Oct 2008 from 21000 top in Jan 2008. We consider current market phase starting from Jan 2008 top of 21000 - similar to market phase after Apr 1992 top of 4600.
- In both peaks - 1992 and 2008 we saw biggest euphoria for Indian equity.
- We saw sharp decline in 1992 and 2008 after euphoria.
- After decline we saw sensex making double top in 1994 and 2010.
- Inspite of negative newsflow about Euro, Indian Politics etc in 2011 we are experiecing slow and steady decline in Sensex similar to 1995 NOT sharp crash like 2008.
We attach chart comparing sensex in 1992-2000 to 2008-current.- In both peaks - 1992 and 2008 we saw biggest euphoria for Indian equity.
- We saw sharp decline in 1992 and 2008 after euphoria.
- After decline we saw sensex making double top in 1994 and 2010.
- Inspite of negative newsflow about Euro, Indian Politics etc in 2011 we are experiecing slow and steady decline in Sensex similar to 1995 NOT sharp crash like 2008.
If Some (like us) believe above 1992-2000 playing out in markets now one should focus on individual stocks than following major index Sensex/Nifty because Sensex may remain in range for next 2-3 years but individual stocks will give super returns than Sensex.
Note: We could be 100% wrong in above view. Reader should NOT go by what we think or believe but make independent view.
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9 comments:
Jiggs,last time round which were the stocks which did well and why?Is there any insight we can use for this time around?
keerthikas,
Stocks which did well in 1996-1997 may NOT do well in 2011-2012. Every time in new market 'up wave' we see new sector/stock taking leadership.
If I remember correctly during 1996-1997 Infosys tripled, Hero Honda Cipla HUL SBI all doubled. All commodities were down, Infrastructure was down, Auto was down and so on. Its difficult to generalise this for current scenario.
I buy stocks which hasn't gone down more than 20-30% from their latest all time high. Over last 1 year when sensex is down 30% and small cap index is down 40% 7 from my 9 stocks are up between 20-90%. 2 stocks are down 20% average
Jigs,
What is your opinion on Pharma Industry doing well in 2011-12?
Can you share with us your nine stocks, if it is OK?
What is your opinion on one of your old find 'Neuland Laboratories'?
Kushal
kushal,
Its not possible for me to discuss individual stocks but my picks have been from Abrasives, Agriculture, Bearings and Starch sector over last 1 year which has given me fantastic returns. I never look for so called multibaggers as I am happy with 30-40% return in 1 year.
Over next 1 year I am now betting on 2 Wheeler Tyres, Ports/Port Logistics, Export oriented Auto parts and starch. For conservative investor I would also recommend beaten down cement/crude/tea commodity stocks.
I am not good in pharma so no view on sector or Neuland.
Jignesh,
Can you kindly share some thoughts on why you are bullish on Starch...
Thanks,
Naresh
Jigs what causes this rhyme?
keerthikasingaravel,
Its natural :-)or say its collective mentality or herd behaviour. I am believer of cycles theory which says certain events (both positive and negative) happen at regular intervals. You can see clear pattern if not exact repeatation in them which is why I say History is my best guide. In my historical study of world indices I have seen most patterns reapeat at some point in future. You saw BSE in 1992-2000 also check my post how current BSE Sensex could be compared with with Dow Jones of 1970.
JIGS
Lot of mainstream analysts also now comparing year 2012 Nifty with year 1996 :).
Rajesh
Rajesh,
Mainstream Analyst or some Guru agreeing with my view doesn't mean I will be right :-). Let me tell you I have met hundreds of great Analysts in the world and some of the most brilliant Analysts I have met are all extremely low profile :-).
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