Dalal Street on a confirmed uptrend: William O'Neil

Despite being the costliest stocks in the world, the Indian markets are on a “confirmed uptrend” and positive for new buys, according to American brokerage William O’Neil+Company.

The markets raced past milestones on a record-setting spree on April 26, when the Sensex closed above the 30,000-mark for the first time in its history, while the Nifty too scaled a lifetime high, buoyed by unabated fund inflows and a global rally.

“The Indian market is on a confirmed uptrend and is a positive for new buys,” William O’Neil President Steven Birch told PTI in an interaction.

“We see the broader indices to be flattish and range-bound in short-term. We’d see them steadily rallying upwards, when the next couple of earnings season gets underway,” he said.

Noting that while the benchmark indices are trading close to their valuation peaks, numerous stocks are making fresh highs as well, which is a healthy sign of a market rally, Birch said.

“In this scenario, my advice is that it’s important to reserve capital for good quality stocks that reflect strong earnings and sales growth, stable RoE (return on investment), and growing institutional sponsorship, among others,” he said.

He also said investors should wait before making fresh positions in those firms right before earnings announcement.

William O’Neil, founded by ace American stock broker William J O’Neil, follows rule—based method to determine the status of the market that takes into account the number of distribution days, volume data, positive closing days and moving averages, among others.

Interestingly, he said while pundits are expecting the indices to tumble on valuation concerns, fundamentally and technically strong sectors/stocks continue to make new highs.

“Can anyone truly know the intrinsic value of a stock? Maruti Suzuki, which is the most expensive car manufacturer in the world, continues to scale new highs. Markets temporarily stumble but historically, there is always a long—term upward bias,” Birch said.

He also observed that institutional and retail investors want the markets to go up, which they generally do in structurally strong economies like India, where the equity markets continue to be a leading asset class.

Its India COO Anupam Singhi said sectors like retail, utility, financials, and oil & gas have been showing strength.

“We suggest avoiding healthcare, capital equipment, and IT stocks at this point. We recommend investing only in the leading stocks from the leading industries,” Singhi said.

William O’Neil set up its operations here in 2013. It covers domestic stocks, providing India-specific analytics and trading metrics for its institutional customers.

Its research team in the country is currently acting as a strong catalyst and centre of excellence to O’Neil’s overall operations across the globe covering over 70,000 stocks in 70 countries.

Birch said they are now focused on expanding base in India and China as both the markets have high growth potential in terms of user base and revenue.

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