CONSOLIDATION WITH DOWNWARD BIAS

This current phenomenon in Indian Stock Market is very strange. Contrary to the general saying that " THE SUM OF PARTS IS EQUAL TO THE TOTAL(IN SOME CASES MORE THAN THE TOTAL)", the stock market as a whole appears to be going up but many sectors/
stocks are trading lower. Just a simple example. The Sensex on 30th September 2009 was at 16500 and the NIFTY around 5000.Today after 6 months, the SENSEX is just trading 6% more than that and the NIFTY also at 6% more. But so many sectors like Sugar,Brokerage,Real estate & Infra have fallen more than 10-20% during this 6 months. Only Banking,IT and Auto sectors are showing some upside.

With the global economies still under tremendous pressure on growth and huge deficits to tackle, it would not be anytime soon that the markets will see new heights. So play safe and holdback atlest 40% of your portfolio as cash to deploy in the second half of the year when SENSEX can come down to 15000 and NIFTY to 4500 levels.

Regarding specific stocks, I continue to recommend SPICEJET with a revised target of 90-100 in 12 months. My new recommendations are INOX Leisure and CAIRN India with an upside potential of 30-40% in the next 12-18 months.