Question:- (asked on 28th June 2008 via Email)
Hello There,
Hello There,
nice to read your article which apparently has been a year later on the investment in shares. True to an extent that investment and saving can lead ahead.
would like to have your views on the current scenario, with the inflation rising and markets tumbling. what approach should one take. is booking part profits at this level or there can be some kind of relief movement upwards where one should take to invest
with regards
SonalAnswer:-
Hi ,
We all know now it is too late to talk on any think happening in the market. In other words...Its all over. Free Falling from 21k and after breaking 15300 decisively it was all looking towards 14k sooner or later. The reaction upto 18k was a relief rally only.
I have warned investors when the Reliance Power Ipo came and subscribed so heavily that its all over. This ipo was best example of worst ipo to avoid. Irrational things weaken the market and actually become time bomb for the market.
So after that what happened we all know. Interest rates and especially crude oil rate and Inflation climbed like everest and engulfed the stock market inside it.
I have advised to exit most of the positions during rel power ipo and when oil was crossing $100 as I predicted it going $ 125-150 and its economy puncturing effect on most of the economies all over the world. And now we live in a globalized village hence everything matter to each other.
Now this market after breaking another level at 13900 can go to as low as 11500 and should stabilize there but worst is also not ruled out in case of election year and uncertainty all over the country. In worst case we can even touch/break 10k level. Congress is going to loose for sure and BJP coming can bring some good news for investor who have been crushed and their hopes and greeds shattered till now by the roller coaster sliding from the hill of 21000.
There can be at least 1-2 year of consolidation after bottoming out.
But around 12k-13k value picking can be done in only few gems with risk.
13000-13300 is a very Strong Support. Watch out how much it will struggle there before finally breaking it.
I will not advice to buy in anytime soon if you cannot wait for more than 2 years. Value picking can be done as some companies are at discount to their NAV but only if you are ready to average at further lower levels. Atleast till elections are over market will be nervous.
Inflation can go to even 13-15% in coming months and further interest rate hikes not ruled out for more disaster.
Traders can get opportunity to see sensex at 14500-15000 once again in reaction to the current fall before finally possibly touching bottom around 10600-11500 in coming year.
Long term fundamentals will revive once again if government takes positive steps in right direction for long term which can give clear cut signal that govt. is serious on Economic progress and infrastructural growth rather than putting immense burden on fiscal deficit for vote bank politics.
Have a Nice Investing,
Posts
good knowledge.... seems u have done a great homework.....truly practical knowledge...
ReplyDeleteWell! Would it be a good idea to write something about Multibagger Indian stocks?
ReplyDeleteYes you can buy multi baggers when market will bottom out. For the first time since the market sets in bear mode from its peak of 21k in Jan 2008, it looks like the market has found some bottom near 12800 in the peak of pessimistic news and views, for the time being.
ReplyDeleteWith present UPA govt. holding majority or not in parliament now after left withdrew on Nuclear deal issue...Though Congress will try it best with SP and others to save its seat till next year general elections but it doest matter much now as even if they go for election now then the market will like the news of NDA coming again with privatization and more economic friendly policies. Hence the market now factors both the cases.
and the most important trigger can be the cooling for crude oil prices from near about $150 to less than $138 now. I expect the oil to trade between $100-125 with in couple of quarters which will help the balance sheet as less subsidy will be required and finally it will help to curb the inflation which is now heading 13.
Now in this probably short covering as FII are continue to be net sellers, we can see sensex up a little more but cant say how long it will sustain. If the sensex will be able to cross 15k and stays above for couple of weeks we are having good time ahead and worst may be behind us. But if sensex takes a U-turn before 15k and also the quarterly results of companies are well below the expectations then this theory will become void and the downward bias will continue and next downside can even go near 11k. But for value investor 11k, or 13k doesnt matter much. If still want to do some genuine value buying then have a look at engineering construction and other infrastructure related plays as they are available at big discount including the frontline real estate players and mid size banks. Have a look at L&T, DLF, Unitech, Rolta, RIL, IBR, NTPC, Pantaloon, Punj Lyod etc on a pessimistic day for long term investment for more then 2 years or better be away from market till bottom is reached.
Still the indian economy has strengths to surpass the small hiccups inspite of the Political drama being played at New Delhi on the pretext of Nuclear Deal which is an issue of another debate though.
Hi,
ReplyDeleteI have been regular follower of your blog. Sensex have come even below than your targets. Do you see at as a bottom?