RELIEF RALLY
At last the 4 years of Stigma attached to the Govt by the LEFT has gone. Memories are still fresh as to how the market crashed in 2004 when the left party announced support to the Govt and when Mr.Sitaram Yechury made a statement that the Disinvestment Ministry will be scrapped. Now if you see in handsight, that seems to be the first major correction in the bull run that started in April 2003 followed by the steeper one in May 2006 before the market peaked out in January 2008.Now the reversal pattern is playing out.The market is playing for a fast & temporary bounce for any positive news after a long phase of falling prices. The survival of Dr.Manmohan Singh Govt, the passing of the Neuclear Bill and the falling Crude Oil prices by almost 22dollars/barrel(that is a good 15%) from the peak in a short span of 3 weeks all adding to the sentiment. As it happens always, people forget(or want to forget) the inflation and industrial producton figures for a while and play for the smart rally in the market. But as history repeats, 80% of the stocks in everybody's portfolio will not show any visible or desirable improvement while the SENSEX/NIFTY shows a rise of 15 to 25% from the bottom.
While a lot of investors will sell now on the assumption that they can again buy the same stocks at lower levels, only a small lot of them actually buy them back. Another set of investors buy stocks they are already holding at high rates thinking that they are averaging down their cost. While the first set of investors dont realise that they are booking a huge loss to catch a small fall in the shareprices, the second set of investors throw good money on the samestocks that let them down or whose valuations are unjustified.
So play these Relife Rallis carefully and restructure your portfolio in these times by selling the weak ones and add the strong ones during the following corrections. In my opinion, even if NIFTY claims to around 4750-4850 levels, it will revisit 4050-4250 levels again as the economy and India Inc has lot of rough roads & uncertainities to cross before resuming the uptrend. But even then, the all time high touched in January 2008 may not crossed not in a hurry and not before late 2009 or early 2010. Happy Investing!!
While a lot of investors will sell now on the assumption that they can again buy the same stocks at lower levels, only a small lot of them actually buy them back. Another set of investors buy stocks they are already holding at high rates thinking that they are averaging down their cost. While the first set of investors dont realise that they are booking a huge loss to catch a small fall in the shareprices, the second set of investors throw good money on the samestocks that let them down or whose valuations are unjustified.
So play these Relife Rallis carefully and restructure your portfolio in these times by selling the weak ones and add the strong ones during the following corrections. In my opinion, even if NIFTY claims to around 4750-4850 levels, it will revisit 4050-4250 levels again as the economy and India Inc has lot of rough roads & uncertainities to cross before resuming the uptrend. But even then, the all time high touched in January 2008 may not crossed not in a hurry and not before late 2009 or early 2010. Happy Investing!!
Labels: stock market and indian economy
posted by manipayal @ 6:37 PM
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