GOOD RELIEF RALLY
With international markets calming a bit and Indian political strom temporarily downgraded from "Harricane" category to "Strong winds", markets had a good rally of 5-7% for the week. Is it calm before strom in the political front in India? No and Yes. No political party wants to face elections now as none of them are confident of retaining the present number of seats leave alone increasing it. So it becomes a murkier picture about the formation of the next Govt whether it happens in 6 months or 1 year. And one thing which market hates is UNCERTAINITY.
As the markets recovered, the traditional BULLS again started forecasting SENSEX to touch 20000 by 2010 and 25000 by 2020. Unfortunately the gulliable investors are attracted only by the round figure and not by logics.If the market has to go to 20000 by 2010 it is 5000points in 3 yrs - a moderate growth of 11% per annum. But 25000 by 2020 is 10000points in 13 yrs - a meagre 5.25% per annum - far less than even bank interest. Unfortunately the investor looks only at the big number in SENSEX and not the period he has to stay invested. And 85% of them will lose patience or panic when market crashes a few times during this long period and sell their stocks and ultimately come to any of the conclusions - 1.stock market is not their cup of tea, 2. It is only Gambling and so you cant make money and 3.Most of the brokers only take care of themselves and not the clients.
In my post dated 14th August, I had mentioned about the natural fallout of market peak out - that is the fall in IPOs and their premiums and listing prices. The August IPO figures confirm this. The amount reaised in August 2007 is Rs.648.78Crs a drop of 82% from the July figures of Rs.3,603Crs. And shares of Purvankara and KKR Mills are already trading at a discount of 10-15% to their issue price. As if this is not enough, an IT company -IT People(India) withdrew its Follow up issue fearing undersubscription resulting in share price plunging 10%
The actions and statements by Fed Chairman and President Bush only reconfirms the underlying and unexposed huge negatives in the U.S financial markets. Traditionally the problems of financial markets never comes as a sudden and massive heart attack but as many mild tremors for a long time before the massive earthquake occurs.
So dont get carried away by the projections of the Index, identify individual stocks to invest for long term and for stock specific ideas email me directly.Good Luck!
As the markets recovered, the traditional BULLS again started forecasting SENSEX to touch 20000 by 2010 and 25000 by 2020. Unfortunately the gulliable investors are attracted only by the round figure and not by logics.If the market has to go to 20000 by 2010 it is 5000points in 3 yrs - a moderate growth of 11% per annum. But 25000 by 2020 is 10000points in 13 yrs - a meagre 5.25% per annum - far less than even bank interest. Unfortunately the investor looks only at the big number in SENSEX and not the period he has to stay invested. And 85% of them will lose patience or panic when market crashes a few times during this long period and sell their stocks and ultimately come to any of the conclusions - 1.stock market is not their cup of tea, 2. It is only Gambling and so you cant make money and 3.Most of the brokers only take care of themselves and not the clients.
In my post dated 14th August, I had mentioned about the natural fallout of market peak out - that is the fall in IPOs and their premiums and listing prices. The August IPO figures confirm this. The amount reaised in August 2007 is Rs.648.78Crs a drop of 82% from the July figures of Rs.3,603Crs. And shares of Purvankara and KKR Mills are already trading at a discount of 10-15% to their issue price. As if this is not enough, an IT company -IT People(India) withdrew its Follow up issue fearing undersubscription resulting in share price plunging 10%
The actions and statements by Fed Chairman and President Bush only reconfirms the underlying and unexposed huge negatives in the U.S financial markets. Traditionally the problems of financial markets never comes as a sudden and massive heart attack but as many mild tremors for a long time before the massive earthquake occurs.
So dont get carried away by the projections of the Index, identify individual stocks to invest for long term and for stock specific ideas email me directly.Good Luck!
Labels: stock market - indian and global
posted by manipayal @ 11:01 PM
0 Comments:
Post a Comment
<< Home