Are you going after the Buzzword in market?

 

What’s the buzzword now in the market? 

In 2020 the buzzword was  crypto currency. Bitcoin witness a mad rush and it went up from $7000 in 2020 to 63000+ in 2021.

All happened in a matter of 10-12 months, and when the rally fizzled out,  it nosedived again to $15000. 

 

Today the buzzword is AI. The market is energised by the magical word AI and any company that uses AI as a catchphrase goes up like a rocket.

NVDA is a typical example of AI syndrome, it doubled in just 3 months. I am sure that retail investors will get burned badly when the market finds a new buzzword. 

The  technology is surely going to help the market & economy but the  valuations will help the bears to drive down the price later. 

Whenever stocks are hyped, we as a retail investor should learn to stay away from them when it’s ripe for correction.

Take for example Vodafone Idea. We repeatedly warned you to exit from the counter at ₹12, yet retail investors were bullish to a target price of ₹18.

Today after an year the stock is languishing at ₹6 with no buyers.

Yet another example is coffee day. It was much hyped by social media when it was trading above ₹70; the media informed us the lady CEO has all the ability to turnaround the stock and it can go back to a dizzy height of ₹500. 

We repeatedly warned you not to touch the stock and in fact informed you that it would trade below ₹50. Today it’s around ₹33 with no buyers;  those who bought it at ₹70 are clearly trapped, now praying for an exit at least at the entry point.

From these example we can learn a  simple lesson-  not to buy anything on hype. 

 

Coming back to the markets, US market has closed bearishly.  I think it’s inversely linked to Indian markets.

Whenever the bears attack US market, India market is favoured by bull and the converse is also true.

Last week we discussed about the following three stock.

1. VA Tech Wabag

2. Rail Vikas Nigam

3. Bank of Baroda

We had given out the reasons for selecting these stocks. Interestingly, Rail Vikas jumped up by 25% from 60+ to 77.50 where we cautioned you not to buy at higher levels. 

The stock corrected significantly from ₹77+ but we expect it to bottom out below ₹70. 

DLF made a big move towards the end of last week and closed above ₹380+.

Bank of Baroda is expected to move down a bit, we are watching on the surge volume to buy it at lower levels.

It’s going to be a bullish week, but we should not commit any money at higher levels. 

 

As far as India market is concerned some sectors like sugar, infrastructure, construction and capital goods are in expansion, some sectors like banking are in contraction, while others like PSU are more stagnating or not quite expanding nor contracting. Nothing appears to have peaked yet, and possibly some sectors like pharmaceutical may have seen their trough.  

Two stocks are still good for trading and they should never be bought for investment purposes. 

1. Mukand: broken out with good volume and can be bought with strict stop loss at current price of ₹139.

2. NCC: this too has broken out with good volume. At ₹108 it looks good for trading for a short term gain.

Both these stocks are trading bets and can do well only in bullish market conditions. Please consult your advisor before putting any money into these stocks. 

As far as the bitcoin is concerned once it climbs above $29k we can expect it to zoom above $30k in short span of time. I am sure none will have their positions at $18k when we initiated the call. 

Let’s enjoy the markets with this gyan, and learn to protect our capital by not committing any money at higher levels.