Namaste!
MRF is the biggest valued stock (INR) in India. It's price is around half the nominal GDP per capita (2022) of India.
It seems overvalued to me. You see, retail individuals cause the volatility (rapidly falling prices). Retail individuals react overwhelmingly and quickly to emotions and they cause the volatility (rapidly falling prices). But due to insanely INR price of MRF, it surely has kept away retail people. This costly stock would have been mostly attracted sensible big pocket individuals and financial institutions.
But now I think it is a good time to book profits in MRF Ltd (at Rs 1,10,000). Following are the reasons:
1. Most of the worlds' central banks increased interest rates at very fast pace. RBI didn't increase as rapidly because they wanted growth. Many companies reported record profits due to cheap credit in India.
2. RBI increasing rates in the year 2024: You see, GDP growth was an important factor to the current ruling party because history has taught that the government which didn't increased GDP growth figures during their ruling tenure, has lost the following elections in India. So, it has been greatly paid attention to increase GDP growth percentage, of course at the cost of inflation.
3. Coming recession in the year 2024 (personal assumption).
4. Slight uncertainty in the economy due to 2024 election.
5. India got a good hype due to moving production from China to India. It caused the Indian stock market (Nifty50) to not fall as much as their global peers. I wouldn't say it isn't possible, but it would take longer time period than the market is pricing in.
6. My bearish instinct.
I do not own and/or planning to own any shares or position in the stock.
Disclaimer: This article should not be considered as an investment or trading advice. The analysis is based on my understanding and experience in the markets. You must do your own analysis and/or consult your financial advisor before investing or trading.
MRF is the biggest valued stock (INR) in India. It's price is around half the nominal GDP per capita (2022) of India.
It seems overvalued to me. You see, retail individuals cause the volatility (rapidly falling prices). Retail individuals react overwhelmingly and quickly to emotions and they cause the volatility (rapidly falling prices). But due to insanely INR price of MRF, it surely has kept away retail people. This costly stock would have been mostly attracted sensible big pocket individuals and financial institutions.
But now I think it is a good time to book profits in MRF Ltd (at Rs 1,10,000). Following are the reasons:
1. Most of the worlds' central banks increased interest rates at very fast pace. RBI didn't increase as rapidly because they wanted growth. Many companies reported record profits due to cheap credit in India.
2. RBI increasing rates in the year 2024: You see, GDP growth was an important factor to the current ruling party because history has taught that the government which didn't increased GDP growth figures during their ruling tenure, has lost the following elections in India. So, it has been greatly paid attention to increase GDP growth percentage, of course at the cost of inflation.
3. Coming recession in the year 2024 (personal assumption).
4. Slight uncertainty in the economy due to 2024 election.
5. India got a good hype due to moving production from China to India. It caused the Indian stock market (Nifty50) to not fall as much as their global peers. I wouldn't say it isn't possible, but it would take longer time period than the market is pricing in.
6. My bearish instinct.
I do not own and/or planning to own any shares or position in the stock.
Disclaimer: This article should not be considered as an investment or trading advice. The analysis is based on my understanding and experience in the markets. You must do your own analysis and/or consult your financial advisor before investing or trading.
Comment:
Disclosure: I am short on Nifty50 via options for the next year.
Comment:
I expect anyone who is reading my writings to know that there is nothing "certain" in the markets. Neither the %gain on stock nor "out-performance" or "under-performance". There is a risk and opportunity cost involved in both, buying and selling. Selling at any price can often result in "opportunity loss" when the stock moves higher and higher. Human psychology is a culprit here. For e.g. I post any stock which seems undervalued or overvalued to me on tradingview. When anyone makes money on that, they wont appreciate me "a single word". But when they lose or it results in opportunity loss, they are bound to blame me. I don't criticize any person, because I know their psychology has defeated them. At last, there is nothing like "easy money" in the markets. The survival of the fittest holds absolutely true here.