October and Stock market

True to its character, the month of October proved to be a damp squib for the stock market. The Indices moved nowhere for the whole month, finishing at the same level where it started. And it gave a scare of sorts to lot of Technical Analysts on the last day(29th October) when in broke their so called critical levels of 5950-5960 in Nifty and 19865 in Sensex intraday. But then with the regular index managers, it was propped up back to 6000 and 20000 - to sooth their nerves for weekly/monthly charts. While the indices have fallen just 5% from their recent tops, so many stock have fallen anywhere between 10% and 20%, as is always the case. The Huge volume in the F&O segment along with the recent volatility suggests that's market is likely to take a directional movement soon. IMO, there is more likelihood of being downside than upside. I am waiting for this correction for the last 3-4 months but that's is stock market for you. It will choose its own time to move where it wants to move. Lets be prepared for such move to pick good stocks and build our Portfolio for long term wealth creation. Best of Luck!!!!!

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!!

SCALING NEW HEIGHTS (OR) DIZZY HEIGHTS?

It has now become a regular feature, when you talk about Indian Stock market, to ask how much SENSEX or NIFTY go UP this week? 3 or 4 or 5 percent. Even the mature and knowledgable Market Analysts are afraid to talk about correction or they word it so carefully with lot of adjectives like - "Having said that", "I dont want to spoil the party","I expect a correction but I hope I am wrong" and all. The other day even the CNBC TV18 anchor Udayan Mukharjee cooly said he is so much used to saying that market is up 300 or 500 points that even on downdays he is still saying up only(by mistake)Anyway Market teaches people in its own way to rectify the mistakes sooner than later.
Many of us remember the famous K-10 stocks during 1999-2000 I.T boom when Ketan Parekh's name associated with a few stocks. Before that in 1992 any share which went up was associated with Harshad Mehta. Now in this bull market which started in April 2003 with Banking and Steel, then spread to Sugar and Retail and is now spreading like wild fire to R-10 stocks along with Power,Infra Structure and Real estate and construction shares.These R-10 stocks represent the Reliance group shares(both brothers) and then the Adlabs,Jai Corporation and anything else even if they have a slight association with reliance(like Nagar.Fert)
When the I.T boom went burst, whether due to excesses in U.S or India, most of the 2nd and 3rd level companies lost anywhere between 80-90% of the values and the better managed one lost only 50-60%. The same story is likely to be repeated in many cases now also and as usual the authorities - be it stock exchange or SEBI turn a blind eye to the manipulation.
Mukesh Ambani says that he is not bothered about his wealth and would like to provide employment and social uplifement but is spending 1bn U.S dollars - Rs.4000crs for his 27 story house for his family alone.
Sunil Bharti Mittal talks about transperancy and efficiency in Govt departments while starting a new enterprise but still we all know how difficult it is to get a birth or death certificate in a Corporation Office or register a land in a Sub-Registrar's office without paying money.
So while a small % of the people talk abt Demat a/cs and GDP growth, the vast majority of the Indian population is worried about water,sanitation and infrastructure.
While a select group of Industries thrive, a vast majority of them struggle or survive due to Govt.policy/subsidy like - Sugar,Fertiliser,Gas and Oil Marketing. A few other industries which were thriving on weak rupee for so many years are now paying the price by the appreciating rupee.
With so much negatives scattered all around(not to speak of early elections) I am firmly of the opinion that opportunity loss(notional) of not participating in the market is better than the actual loss to be incurred by heavyly investing at this level of 18400.
A sharp and Swift correction is surely on the way and let us wait and see how many of the market players say that it was a welcome correction and how much of the money
which is waiting in the sidelines is rushing in during that fall.Good Luck!!!!