Investing in these stocks can increase your earnings on Diwali, know from experts what will be the strategy

 Nifty fell almost 360 points on the expiry day which we saw after several months. This was followed by a fall of 600 points in 2 days with another 245 points fall on Friday. Well, caution was already in place before the 18300 level and we were on the side. Although we added small amounts in A group stocks, the attraction was in our select B group stocks which were reaching new highs or near new highs even in such falling markets. Concentrated efforts were made for the short market due to the rise in bond rates in the past few days. At least the bond charts show that and whenever this happened in the past, there was a very sharp rise after that. Above 18650 we have seen around 1000 points yet my range of 17300 is safe. Nifty closed at 17750. The drop was 5.36% from the top which is almost done as there is no case of 10% drop.

We ran straight from 14200 to 18650 and so expected some improvement. We had mentioned in our earlier reports that Nifty PE has crossed 28.5, hence there was a need for correction. We had also mentioned that the market capitalization of GDP had also crossed 1.35 which was definitely in danger zone. There was a flood of Buy Calls everywhere. After this meaningful correction, let us see what are the factors which will decide the market trend in November. I confirm that nifty will not go below 17300 and new range seems to be 19200, although earlier I mentioned that nifty will not cross 18800 until December. However the fall has replaced my level post the bounce which will be equally sharp and V shaped.

In my previous report I had given the calculation why we should avoid IRCTC. Big drama happened in less than 24 hours where earlier the government announced that iRCTC would have to share the facility fee with the government. Like iRCTC has only 2200 cr revenue pre covid and 80% comes from this source and if 50% is shared then all is lost. The stock reacted, 30% lower circuited 2 crore volumes and the government later withdrew the decision. A day back when the stock split took place, there was no credit in demat, so no one could sell. This should be against the ethics of fair dealing which allowed operators to manipulate stocks. Who should we hold accountable... Depository, Company or Policy Maker...? Only Lord can save the traders in this country, where front running is done in broad daylight and still no action is taken. The only poor people who get stuck are short timers in what we should call a financial encounter. Anyway, I will avoid this stock forever as I don't see anything to buy there at 250 pip.

Alternatively, I feel that I am underestimating the powers of India, the Indian public, merchant bankers and all stakeholders. If iRCTC can trade at 350 PE and NYKAA can do IPO at 840 PE then Nifty valuation should be 140000 (200 PE) and not 18000 as there is massive PE expansion. From these 2 issues I think the country's lawyers can take this argument to the courts that all penny stock cases are bogus as 840 PE is well accepted norm and approved by all legal authorities. Therefore the courts should accept the valuation of 100-200 PE or penny stock which they were rejecting till now.

Let us now come to the ground reality to understand why the market has gone down and will start the journey up again...

FPIs made net purchases of Rs 53000 crore so far in the calendar year 2021, though October sales were just Rs 11000 crore as per NSDL (some media is showing Rs 20,000 crore), followed by September purchase of Rs 13000 crore. This is a huge purchase of Rs 274000 crore from May 2020 ($ 37 billion). This figure is from the last few months, which means FPIs are churning out large portfolios, maybe for bonuses. Nothing absurd is seen in the October sales figures. India downgrade, we don't give much weightage. This will prove to be redundant once Nifty comes back to 18500.

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