Friends,
This is God send opportunity when the stocks are down by almost 50%.I wrote in my last post that market will recover.It has recoverd though Midcap/smallcap is still out of favour.
The next week will be the last week of F&O and hence volatility will remain.According to my view,from the 1st week of feb market should start the pre budget rally which can take market to cross even previous highs.
The fall seems to be more a planned one done purposefully then a real selling.
The reasons that I feel like that is as under.
1)FII sold 17,000 cr worth stocks in Jan but didn't take out ther money fom India.If they would have done so , which in case to make up the loss in US Subprime Mortgauge,then rupee must have gone down...means rupee must have fallen to 40-40.50 level.As rupee has not fallen it means that they sold to invest in REL Power issue and the total value of IPO is 12,000 cr it is natural that they will not get 100% allotment.One can assume that it can be 10-20% means max 2400cr ...means 15,000 cr will again come to market.
2)Read somewhere that NRI's sold some rs 30-35 cr shares on 14th of Jan when there was a fall of 100 points only.They again sold some 10-12cr worth shares on Tues when the sensex fall by 400 points.
They bought 22 cr worth shares on Monday when market tanked by 2000 points and again by 5-6 cr on Tues when there was a lower circuit in first 1 min of opening.NRI's didn't buy stocks on last Friday, of last week,but bought on Mon and Tues , it means the overseas investors were knowing that the fall was to come and that too a bigger one on Mon and Tues this week.
3)One more reason for me to believe that this is an engineered fall is that,if one goes back to look at the May 2006 fall, which happened from the then new high of 12700 to 8800,it was the time RPL(Ril Petro) getting listed.That time it weas big brother listing , now it is younger brother listing.
This time the market broke down from the recent new high of 21000 to 15500.
Looking at the above reason I am of the opinion that this is more a engineered fall then a real Bear Market scenario.
And I am sure that market will get back to normal in due course of time.Midcap/smallcap are here to stay , ofcourse having strong fundamentals.
I have discussed some stocks here as also written some stocks in my post of Indian Stocks on Sale at 50% discount.The are still a buy as the fundamentals are great of these stocks.That doesnt mean that others which I have discussed in past are not.I leave what yo buy to to my readers .
Rajeev,
ReplyDeletei read in DNAMoney George Soros was the entity who shorted Nifty the week before. it would be interesting to see what happens during this thursday on whether he carries fwd his shorts or covers his shorts.
if Reddy cuts rates or atleast lessens his hawkish stand then that would be the right fillip for market to turn bullish again.
lets see how it goes but this crash magnifies your repeated appeal to book profit when the stock doubles as during panic not even the best of stocks can withstand the pressure.
Nice lesson learnt:)
Here ie the link to the article where George Soros said this was worst financial crisis since WW II.
ReplyDeletehttp://us.ft.com/ftgateway/superpage.ft?news_id=fto012220081520091475&page=1
here is a small excerpt from the article:
"So, the current financial crisis is less likely to cause a global recession than a radical realignment of the global economy, with a relative decline of the US and the rise of China and other countries in the developing world.
The danger is that the resulting political tensions, including US protectionism, may disrupt the global economy and plunge the world into recession or worse.
For Prashant and Rajeev
ReplyDeletePrashant, Thank you for posting the small excerpt from the Soros article, and the link.
As an Indian, the rising trade deficit of US-China; and the Chinese game-plan behind it, have worried and concerned me over last two years.
I strongly RESONATE with what Soros says. My recent trip to China and Korea, have fuelled my fears and worries about Chinese ambition, ruthlessness and will to power, and its implications for India. A disproportionate rise in CHINESE power, ofcourse US will not take it easy.
India will be on troubled wicket.
Infact, calling China and India as the two great economic powers in the same breath is dumb and misleading. China is way way way ahead, far more powerful and shrewder.
I will read this article and get back to you.
I have things to share with both of you.
Regards KM
Sir,
ReplyDeleteI am a regular reader of your blog.I have a small doubt.I have bought Wire and Wireless India at the rate of Rs.99.50 on January 2nd 2008.Can you tell me is there any chance for WWIL to come up in the near -future.?Currently, it is staying around Rs.50.
Thanks in advance.
Hi Sambhatkumar,
ReplyDeleteWWIL is good.This company of SubhasChnadra owner of Zee TV looks definatelty good to me.The reason behind it is WWIL management has decided to spend %10 bn in 4-5 yrs and hence I am seeing a great value unlocking anytime.
I can't say whether WWIL will cross 100 in ST or not but can say it can cross and even make new high ina years time....
All said and done,these are all my views and I can go wrong....
Rajeev,
ReplyDeletei just re-read your post, its quite interesting to see on how you related rupee value during crash to stock market performance.
i totally agree with you, if you are bullish on indian economy then you need to be bullish on indian stockmarket and indian ruppee and vice versa.
Even if rupee linking theory is not correct, still Kudos to you for thinking in that term which none of the existing analysts have mentioned about.
-Prashanth
Sir,
ReplyDeleteYour answer for my question on WWIL is giving me a great confidence.I will hold the stock for a year or until it touches my purchase price.I have some questions to ask you regarding fundamentals of the market and the companies.It would be very much helpful for me to apprehend my fears about the market.Can you help me sir?