This week, the Nifty has moved into a range showing a big fall or a sharp upside. However, this range of Nifty points towards market consolidation and is set to show a rapid rise in the coming days. This would be because the market did not decline even after the India-China border tension and the weak economic data of the first quarter, which we had discussed in previous reports. In fact, the market has risen from a low of 11,200 to 11,613. After the 11,613 level, the only resistance for the market now is the previous high of 12,400, which we will definitely see.
We believe an increase of Rs 100 in ARPU means new revenue of Rs 36,000 crore for the company. The area in which US tech companies have shown great interest is reflected in the fact that Jio has sold 20 per cent stake in the company for more than 1.5 lakh crores. With this, it has become a company of 7.5 lakh crores. At the same time, the market cap of Bharti Airtel is less than Rs 3 lakh crore, while the market cap of Vodafone Idea Limited is only Rs 32,385 crore. Very soon it will be a free cash flow (FCF) generating company.
Auto and auto parts companies are coming to Limelight for many reasons. We were recommending MARUTI from the 5000 level and suggested that it would cross 8000 very soon. Tata Motors (TATA MOTORS) had the same condition. One of the reasons for our conviction was a major distribution adjustment with dealers in January-February 2020. Also the good monsoon, rural income, festive season, possible cuts in GST and depreciation benefit under INCOME TAX ACT were also among the reasons for our conviction.
Now the demand for dealers has suddenly increased, as they have removed the old inventory and now the companies are ready to increase production once again. In fact, heavy commercial vehicles (HCVs) are getting huge export orders mainly for Tata Motors and Ashok Leyland. Shares of auto and auto parts companies declined sharply as it seemed that there would be no production for the next 12 months, but we were confident that once production started, their stocks would bounce and this happened.
It would be quite interesting to repeat Rakesh Jhunjhunwala's quote here. It is, "If the market reacts to the immediate rise and fall in GDP, economists will be the richest people in the world." The present time proves this. The market moves forward thinking ahead. The success of CNI means that we always think against circumstances and understand the effects of action and reaction.
Russia is not far from the vaccine launch, while the US has also claimed that the vaccine will be introduced by the OTC. India claims that the vaccine may come by January 2021. Whoever launches the vaccine first, but the vaccine is not going to reach the common citizen before March 2021. So next month you will work in this way and there will be no change in the mood of the market.
It is important to understand why we are involved with the vaccine and the market. Many believe the market will crash after the elections in the US and the QE program will end after the elections. We believe that this is not so. America has passed a bill of 13 trillion dollars Qi and we have not seen even 20 percent of it being spent. This means that a major part of it is yet to come to market.
Now the vaccine is related to this. Until then the vaccine will not reach the public at large, Qi will not stop. It has nothing to do with the US election. Even if new presidents come, they will have to adopt the same policy and the Fed can continue to buy bonds. Right now we have seen DOW grow from 18,000 to 28,000 with a spending of 300 million dollars. And the same correlation will be made with the remaining $ 1 trillion.
DOW will have to cross 40,000 and 50,000 to 80,000 during this period. When the vaccine arrives and spending reaches 10 trillion dollars, the economy will be financially strong. Here you should note that America was on the verge of vertical collapse after LEHMAN and only $ 800 billion gave life to the American economy, which lasted for the next 12 years. However, we were hoping that it would only last 4 to 5 years.
However, no economist can really estimate how long these $ 1.3 trillion will help, but past experience tells us that we are 15 to 20 years away from disaster. There will be no major slowdown for at least the next 5 years, so the better option is to keep investing.
From January 2021, we will see the new SEBI order coming into effect, which is a 25 per cent mandatory investment in small and mid caps. Although there is a possibility of merger of midcap funds with large caps, there is no such case and no ownership in small caps. This means that of course 25% of the fund will go into small cap. Now if you are smart, pay attention to the quality small cap and wait for your turn.
Returns in excess of 1000 percent cannot be ruled out in some strong places. In some cases you can get more than a thousand percent. In this way you have a life time opportunity. If you left it, this may be your last chance. If you are unable to decide which stocks can be the next multi-baggers then you can take help of experts.