Weekend Observations - 27.08.2023

Weekend Views

RTI For Money

8/27/20232 min read

Top Gainer this week has been Linde India which gave a return of 18.28%. Stock looks very good on the charts with it being near its high and the volumes being good as well. Fundamentally the EPS was not so good in the last quarter and the P/E ratio is also a bit high but the markets seem to know something that is probably not in the news yet.

New 52 week high - 35

New 52 week low - 02

Near 52 week high - 275

Near 52 week low - 30

If we see the above list it shows that more stocks are hitting or near their 52 week highs than lows which means there are a lot of large and midcap stocks making money for those who have invested in them. Do you own any of the stocks hitting new highs? Or does your list contain the laggards?

Even if you had invested in Sensex/Nifty companies the return has been above 14% since Mar 2023 which is a pretty good return in less than 6 months.

There was a huge problem in Mar 2023 when the US banks like SVB were in trouble and the FED had to step in to bail them out. The markets have rallied since then which seems to indicate that a bottom might have been made in 2023. However if you listen to a lot of experts in the US they seem to indicate that the problems in the US banking system are far from over and we could get a recession and a bear market in 2024. Some of the great investors/traders like Michael Burry have also gone ahead and shorted the markets anticipating a fall. So, is there a possibility that the markets could break the March 2023 lows? Could we get any indications from history?

In 2008, the Indian markets topped in Jan and hit a bottom in Oct 2008 after the Lehman crash in Sep 2008. The markets then went sideways for 6 months till March/April 2009 and touched its previous highs in Oct/Nov 2010. It stayed in a range and broke its highs conclusively only in March 2014.

So we can conclude from the past that there could be a possibility that the markets test their March 2023 lows if the situation gets worse from here and then gradually go back higher. But the difference this time is that markets are very close to all time highs unlike in 2008 where they were 65% down from the highs. So the markets seem to be evenly poised at the time with a slightly positive bias which we should take into consideration while investing.

The focus should be on stocks hitting new highs and buying them during corrections.

What are your weekend observations?