Technical Analysis of Indian Equities by Nooresh

Large Cap Leaders and Contrarian Bets of 2018

2017 has been one amazing year with the Nifty not even dropping 5% on a closing basis and absolutely no scare all through the year. One of the smoothest ride.

The Smallcap Indices have gone through the roof with BSE Smallcap Index up almost 55-60% this year.

A good post in these times to read again - Doubled your Money in Last 3 Years ? Skill or Luck ?  ( The heading would now change to Tripled your Money )

We should thank the markets to being so kind to us.

Wish you a Happy and Healthy New Year.

Think 2018 will not be as smooth as 2017 but who knows could be much better or crazier.

My personal view is one needs to be more cautious on Smallcaps/Microcaps given the Momentum Divergence ( Thats my view but my positioning because of a technical bias is to keep riding but ready to jump out anytime)

For now the kind of momentum in smallcaps is like a problem of plenty for a momentum trader in smallcaps. Even while making money you are envious on the ones which you missed. Greed and Envy at its peak and this is when one can make stupid mistakes.

Do read the previous post - BSE Smallcap Index and Nifty/Sensex–Momentum Divergence–How long can it continue ?

After such divergences in Smallcaps to Largecaps and after a rally we generally see a lot of sectoral and stock leadership changing.

Just focusing on the Top 100 stocks and looking at long term charts the following come up on radar for possible big changes.

Have not given a view but would like to receive views on the questions in the possible scenarios for following charts.

Bajaj FInance – Time for Underperformance ?

Bajaj Finance

Bajaj Finserve – Time for Underperformance.

Bajaj Finserve

Bharti Airtel – Will it cross ATHs ?

Bharti Airtel

BHEL – Will it rise from the ashes ?

BHEL

DLF – Finally Fortunes Turning for the stock as well as Sector going into a big turn. Also an observation a Bull Market sector generally revives after 8-10 years. ( Cements 1992 and rallied in 2003-2007, IT did better from 2010). Also the newer names do better.

DLF

HDFC BANK – Super Outperformance this year. Time for some Time correction and Underperformance ? Also it has become the largest weight in the Nifty now.

HDFC Bank

Hindalco – After a crazy rally is this a Top or Start of a Bigger Momentum Cycle ?

Hindalco

IDEA – Will it turnaround ?

Idea

Indusind Bank – Underperformance and Time Correction ?

IndusindBank

 

Infosys – Back to a Slow Upswing or will it break the lows of 2017 ?

Infosys

Kotak Mahindra Bank – Time Correction or Breakdown and correction ?

Kotak Mahindra

Larsen & Toubro – Is the leadership going to be passed back ?

Larsen and Toubro

Mahindra & Mahindra – Will it be a quick sprint or Marathon when it breaks out ?

Mahindra

NMDC – A long term turnaround ?

NMDC

Reliance Inds – Broke out in 2017. No reasons for a stop as of now.

Reliance Inds

SBI –Time to regain some old Glory by crossing ATHs ?

SBI

Tata Motors – The Big Contra bet of 2018 ?

Tata Motors

TCS – Perception Negative but Price Neutral. So what gives in ?

TCS

YES BANK – Will it again survive the scare – Yes or No ?

Yes Bank

Zee Ent – Up above the 2000 high. Can it lead or stay sideways.

Zee

Conclusion – Some interesting trends could shape up over the next 1 year. If you get a few of these right it could be a good year for you even if the Benchmark is not a smooth ride.

My personal view is the Pvt Banking and NBFC outperformance could change and leadership could shift ( Do your own research). Watching out for stocks like Tata Motors, SBI , Larsen and Toubro, M&M , Bharti for leadership. After long time would have to focus a bit more on largecaps. Would love comments !!

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DISCLOSURE Nooresh Merani

Securities covered above:  All mentioned in the above post

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Nooresh Merani and his family/associates/ analysts would not have exposure in the securities mentioned in the above report/article.

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Article by Nooresh Merani

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{ 3 comments… add one }
  • Sagar December 29, 2017, 14:37

    Good post as always!

    My 2 cents:

    The delta for TaMo will come from the CV segment.There seems to be an uptrend in CV volumes now,atleast temporarily.Though maybe better to play it via Auto component stocks?

    I feel IT can be an interesting bet for 2018.There is valuation comfort+under-ownership+good trend..especially some smaller names.

    Seems like 2018 will be a very stock-specific year with less activity on the surface,but good enough returns underneath.

    Reply
    • Nooresh January 2, 2018, 13:07

      Yes Tata Motors looks the most interesting bet for this year. IT is under owned and technically bottoming out. Smallcap IT has done better

      Reply
  • Sagar December 29, 2017, 15:31

    Great post as always!

    My 2 cents:

    The delta for TaMo will come from the CV segment.There seems to be an uptrend in CV volumes..atleast a temporary one.Though maybe better to play it via Auto component stocks?

    IT can be an interesting bet for 2018.Valuation comfort+good trend+under-ownership,especially in the smaller names.Very good dividend yields too.

    Reply

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