A Brief summary of the Micro/Small/Midcap Carnage


(Devaki Nandan Tripathy) #215

Smallcap index has already fallen around 27% and it was supposed to stop at around 25%. :grinning: During January 2013, it stopped at around 30%, so keeping that in reference, a touch to 6500 seems possible.


(LTInvestor) #216

Fundamentally, given that the entire 2017 rally was fluff (no earnings, just liquidity), if earnings do not show up in Q1, no reason for the index not to come down to 5500-6000 levels. + you have oil price rising which will most likely impact EBITDA margins with input costs going up.

I have been tracking Kajaria, but even after all the correction, at Rs. 16 EPS it is trading at 25PE. It was at 50PE before the correction! So think correction some more time to go, unless liquidity turns on.


(Sameer31) #217

More like between fear and capitulation.


(madhavikkutti) #218

(rskothari) #221

NIFTY and Sensex at 52 week high and Small Cap and Mid Cap at 52 week low. Diversification is must.


(inonix) #222

#223

These predictions have exactly 50% chance of becoming true.


#224

Yiah… but the 4th elliot corrective wave is coming for nasdaq , most probably in 2019…
And it can be quite damaging…
There is bearish divergence everywhere in the fang stock charts and nasdaq, dji interestingly is lagging behind nasdaq composite and 100…(its like our midcaps lagging behind the nifty or sensex)…
So there could be one more rally in dji before these mentioned predictions comes true…
And no surprises, indian market has the same position…
The current midcap correction should look like shame…
I am actually planning to liquidate all my equities soon…

Disclaimer… technical speculation and my beliefs only , no intentions of spreading fud at all…


#225

ok. got it. unfortunately I have nil knowledge of technical analysis.


(KKP_Investor) #226

TCI is trading in such as tight range that it must be awaiting an event of some kind. It can break down a bit to get to next support, or breakout to new highs easily. Not sure. Did not study it since I follow Charts for the most part…

Hiteshbhai’s confidence is high based on his conviction and analysis, which is why I will add it to my radar.

KKP


(KKP_Investor) #227

Sectoral Rotation…Just that this time it is Large Cap VS Rest…


(KKP_Investor) #228

Best is to form the FIBs to find out where it will stop, since usually the Fib numbers come true.


(madhavikkutti) #229

This means, we are currently very close to the Capitulation stage of the Investor Sentiment Cycle shared by @devaki.tripathy :slight_smile:


(Shyam) #230

It is very difficult to predict any cycle, especially if it is in the future :wink:

I think we need to now focus on SIP strategies and build convictions about stocks. Any investment with less than 3 years horizon would be a gamble.


(manivannan.g) #231

If someone is thinking of liquidate everything now, IMHO that is like burning a house to fright a rat. The rat may eat 20-30%, but burning the house would be very costly though. Until Jan, I was sitting 80% equities, 20% cash. I’m fully invested and look forward to SIP without fail.


#232

i guess, you didnt get the undertone…
i am expecting one more leg up in the midcaps and small caps to line in with the large cap market and solve the lag…
that is when i am planning to liquidate…

i do not want to be in any part of the global carnage in the equity market of 2019-2020…


(Dinesh Sairam) #233

The problem with that statement is that in 2016, people said it would be 2017. In 2017, they said it’s 2018. Today, they’re saying it might be 2019-2020. Looks like even a market crash isn’t on time in India.


#234

Peter L. Bernstein “Understanding that we do not know the future is such a simple statement, but it’s so important. Investors do better where risk management is a conscious part of the process. Maximizing return is a strategy that makes sense only in very specific circumstances. In general, survival is the only road to riches. Let me say that again: Survival is the only road to riches.”


(Sarabjeet Singh) #235

I was looking at the divergence between Small index and Nifty since Demonetization Lows.

It seems all these index are in sync now. This may be the end or atleast slowdown in correction of Mid and Smallcaps.

Any Idea if Divergence of Bank Nifty could pose any risk to overall market sentiment ? Though I was looking at Bank Nifty data from Feb-2016 and it has always shown similar divergence from NIFTY-50.

Disco : Not a buy or sell recommendation. Just sharing my observation.


(Dinesh Sairam) #236

I don’t think NIFTY Bank is a good index to be compared with the other broad market indices.

  • HDFC Bank alone forms 36.22% of the index.
  • Out of the stocks in the index, the top 3 form almost 66% of the index (HDFC Bank, Kotak Mahindra Bank and ICICI Bank).

image
(Source)

Also, BFSI forms only 37.14% of NIFTY 50. So in essence, only about a third of NIFTY 50’s movements is explained by the movements in NIFTY Bank (Which isn’t such a great index to begin with).

image
(Source)

On a closing note, there has been a rush of funds to large caps because of the MF reclassification. A good part of that movement probably went to bluechips including and not limited to HDFC Bank. So, the divergence in NIFTY Bank could be explained by this, seeing as how HDFC Bank forms a chunk of that index.