PAYING DEARLY FOR PLAYING EXCESS

The predictable results are on their way. Afer falling a good 16% in January alone, the Indian Stock Market continued to show its weakness in February also. And adding to the unfolding stories of misery are the devolvement or withdrawal of IPOs like Wockhardt Hospitals and Emmar-MGF. As I had observed in my posts in October and November 2007, the market went up from 15500 to 21200 without any change in fundamendals but only with sheer madness under the pretext that the interest rate cuts in U.S will help moneyflows to Emerging Markets. And I am sure atleast a small percentage of that madness was contributed by the TV Channels who were celeberating every 1000 points rise by cutting cakes and wearing clown caps, not knowing that market will make them look so soon. I am also surprised by the fact that lot of them are still hoping for an uptrend in the market as quickly as in february under the pretext that the refund money of Reliance Power IPO will flow into the market or the pre budget rally and all. Again they make the same mistake of talking abt cheap valuation because the prices are 30-50% cheaper than they were 1 or 2 months ago. In my view, this bull market which started way back in April 2003 with SENSEX at 3000 has risen 18000 points. So a correction of 50% of that say 9000points is a possibility. That makes it a possibility that Sensex can come down to 12200(21200-9000) but taking into account the corporte growth and PE expansion it may halt between 14000 to 15000. The credit crisis in U.S and Europe are far from over though the steps taken recently may start bearing fruit in the next 6 months or so. But remember we, in Indian Market have to catch up with lot of downside as the virtual collapse of IPO market and the OVERSUPPLY and OVER INVESTMENT in Real Estate sector will show their ugly faces in the coming days. So dont be in any hurry to invest now. Even 3 months later you may get many stocks at the same rates if not lower. So plan your taxes, enjoy your summer holidays and spend time with family and friends rather than with Business channels and stock market. HAVE A GOOD TIME.