The Markets

Nifty kissed 13000 level and this is not a bad thing to happen in a scenario that is otherwise very unnerving.

However, at this juncture we need to pause for assessment of future possibilities in respect of Nifty. It’s present PE is 27 and P/BV is 3.5 and dividend yield is 1.4%; all these 3 parameters are close to their historic highs. There has been contraction of economy and GDP growth rate is estimated to be -7.5% while core sector contraction has widened to -2.5% in October over September’s +0.1%. The fiscal deficit has reached alarming level of 120% of annual target and will further rise till the end of FY21.

Now there are two ways to look at future, either with great optimism or with some skepticism. The foolhardy may ignore the headwinds and the cautious will take note of it. One this is clear however for both types that the risk reward ratio is not favorable. For gain of 1 rupee it’s risking 4 at this precise moment.

It is very much apparent that buggies have contributed to rise of Nifty in November and have no room for further rise so Nifty will feel tremendous pressure in going up while the fall only may relieve it of the heightened tension.

Krishna Khandelwal

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