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My View for Market and Nifty in 2023 - Will it be a new Bull Market or I expect correction

Discussion in 'Technical Analysis' started by shabbir, Jan 4, 2023.

  1. shabbir

    shabbir Administrator Staff Member

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    shabbir, Jan 4, 2023
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  2. emailsaravanans

    emailsaravanans Active Member

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    Really liked the video.

    You had mentioned towards the end of the video about focusing on companies with earning growth. There you mentioned you need to understand why the price is not moving inspite of 20% earning growth. It may be that the price might already covering the earnings growth (overvalued).

    I have a question regarding the same because I still have not figured out how to do that.

    Is there a formulae/process to find out what is the right price of a company to enter? I believe it may not be straight forward and it could be an art. I believe it is to do with current and past PE, PE compared with other companies in the same sector, book value, and ROCE. If there is a way, I would like to hear it from you.

    If you can explain with example, it would be great. For example, I noticed you had averaged "Clean Science" when it reached 1500 and still suggest that it is a good price (1500) to accumulate even after the last quaterly results. If you could explain that, that would be great. how do you derive 1500 to be the right price? Same with Divi, you mentioned below 3k would be the right price to accumulate.
     
    emailsaravanans, Jan 5, 2023
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  3. shabbir

    shabbir Administrator Staff Member

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    Mainly sentiments. So there is no formulae.

    Those price levels are technical levels. Prior to December, we can see that Clean science was taking support around 1440 ish levels twice.

    CLEAN_Daily_05-01-2023.png
    Then it cracked that levels but still got back up and so 1500 is a good price for this stock.

    However, when you see the levels of Rs. 1500, it is trading 60x TTM earnings but it is under 50 times 1 Year forward earnings and 40 to 50 times for such a high growth stock is justified.

    So I came up with that price.
     
    shabbir, Jan 5, 2023
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  4. emailsaravanans

    emailsaravanans Active Member

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    Just would like to acknowledge few points on the video.

    You have been positive about Indian stock market since the market started going down (post war).

    I am not surprised to hear your view that it could be either bull or sideways. But, the world markets are bleeding and the recession is already happening and the US and Europe negative sentiment, war, weakening trade deficit in India (all imports gets affected), and high inflation. None of this is going to affect us? Good to be in Indian market.

    I liked the data that you presented that the nifty did not have fast rally (like other markets) for the past 6 years. So, it is due for a good rally considering its performance.

    From your view point I see this year would be a good time to accumulate for long term. From the technicals I see it may go down to 16800 (support) in the worst case and it would be a great time to accumulate.

    I see Volatile year 2023...!
     
    emailsaravanans, Jan 5, 2023
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  5. emailsaravanans

    emailsaravanans Active Member

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    "However, when you see the levels of Rs. 1500, it is trading 60x TTM earnings but it is under 50 times 1 Year forward earnings and 40 to 50 times for such a high growth stock is justified."

    Trading at 60x means you are referring to its PE right?

    Also, Could you explain how to derive it is 50 times 1 Year forward earnings?
     
    emailsaravanans, Jan 5, 2023
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  6. shabbir

    shabbir Administrator Staff Member

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    Completely agree on this view and I think if the market runs very high up then we will have to wait for the crash. I see that as a possibility as well but it needs a big rally for that to happen.

    So EPS for Clean Science has been 18 and then 21. For TTM it is 24.

    24 EPS x 60 times is 1440 which was the support last time.

    Now lets say company grows its EPS by 25%. So from 21 it goes to 26+ for March 2023.

    Now again a 20% increase from 26 levels is close to 30 Rs.

    So an EPS of Rs 30 x 50 times is Rs 1500.

    Hope it is now clear what we mean by the future EPS. Now if the company is not able to reach an EPS of 30, then it comes into bigger correction. So when you watch quarterly results and see the path to 30 EPS on, you aren't too worried because PE may contract or expand a little.
     
    shabbir, Jan 5, 2023
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  7. emailsaravanans

    emailsaravanans Active Member

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    Wow! Thanks for the information. Super useful...! Now I can understand...!
     
    emailsaravanans, Jan 6, 2023
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  8. shabbir

    shabbir Administrator Staff Member

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    The pleasure is all mine.
     
    shabbir, Jan 7, 2023
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