Yet again am back with my post on Nifty Calculator.
What is Nifty ?
-> Nifty is an index with 50 stocks and has no existence of its own. So the Nifty price is a function of the movements of the 50 stocks and a major impact is with the top few weights.
-> As of 31st July some observations.
The top 5 stocks have a weightage of 33%
The top 10 stocks have a weightage of 55%
The top 20 stocks have a weightage of 74%
The bottom 10 stocks have a weightage of 6%
The bottom 20 stocks have a weightage of 20%
Every technical analyst/fundmental analyst/ strategist and even the paanwala talks about Nifty/Sensex has an answer to the question – Nifty kya lagta hai ?
9 out of 10 people will give you an answer.
But if you ask them tell us top 5-10 stocks which will lead the market in the direction they say only a couple of them will have the answers.
You can find your own possible targets by playing around with the Nifty calculator which may be a better estimate.
What is Nifty Calculator ?
-> As per the weightages given by NSE for Nifty stocks we have created the Nifty Calculator.
-> Change the expected price and the expected Nifty will change accordingly
-> Create 3 different sheets for yourself–
Pessimistic ( where you put the worst possible prices you think )
Optimistic ( the best prices possible)
Neutral/Rational/Technical / Fundamental ( prices on any reasoning )
Please Note as weightages change every day by small margin this will not give an accurate estimate but will be approximate.
Look at the previous posts on Nifty Calculator and how it helped us.
-> The first time i put this up was in December 2011 ( It bottomed in next few weeks). It helped us be bullish instead of the market sentiments and were buyers from 4800-4550. Check the post – What is Nifty and What is your Target for Nifty
-> We did this exercise again when we came out with a very bullish view in August 2012 in a report titled – Analyse India – Forget the Past.
This time it helped us to come out with an optimistic targets.
Check the Post - Nifty 50 Index – Weightages and Free Float Market-Cap
-> The time it was discussed in August/September 2013. Although my pessimistic guess worked precisely but we could not pick that bottom though.
Check the post - Where is Nifty going ? Do it yourself – Market kya Lagta hai also another post on how it was necessary to invest slowly with long term view in the drop to 5100
So put in your sheets and post your comments as to what do you think can be the best and worst case in next 3-6 months.
if somebody reads my views it always keeps mentioning as to how one needs to be stock specific and not start deciding investment and trades only because of Nifty trends.
I believe stocks will come to levels where you would like to buy but Nifty may not come to the same zone. For example a Reliance Inds , L&T & ONGC are down 15% from peak levels post elections but Nifty is down only 2% from peak.
At the same time a month back IT and Pharma stocks had fallen 15% from peak and are into new life highs today.
Post election results we have just moved 3-5% on the Nifty but a lot of midcaps are up 50-250%.
Bottomline – Be stock specific there will be many opportunities be it trading or investing.
Indian Equities Outlook & Introduction to Technical Analysis – Bangalore Seminar on 23rd August – 2014
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