Wednesday, October 17, 2007

Wobbly Wednesday - Sensex,Nifty in Turmoil - October 17 2007

The last few weeks have seen what the experienced hands had not seen in their lifetime - Equity markets at all time high, Gold at 28 year high and Oil at unprecendented heights. This is an anomaly in the flow of money from one markets and other. Traditionally money moves from one market to another with the results visible from gaining and losing markets. However this time the markets had behaved as if there was no logic and only exuberance had a say on sentiments.

Time to be cautious is old gents say when such times are prevalent. Market were trading at P/E of 26 which rose from P/E of 22-23 just a few weeks back. Do fundmentals change so quickly? This creates doubts and rightly so our FM said which was taken lightly by the bulls. The bulls didn't notice that the bubble which arose from the easy liquidity comng from the Fed cut since September 18 was as hot as water on a hot pan. It can vanish as quickly as it appears on the scene.

The other side of the story was that the friendly FII's were not sentimentally attached with the stock markets and they were simply minting money where it is possible. Recent Fed cut coupled with strong rupee transaled into a money spinner for the FII's who cannot manage such returns in the recessionary US and European markets. This resulted into a slosh of hot liquidity which chases strong returns. The concerns on such liquidity was evident when all concerned with the Indian economy viz SEBI,RBI and Finance Ministry collabrated to come out with a way to control such liquidity. Todays clamp on the Participatory notes was just the kind of trigger which can prick buubles and take air out of them.

Talking about PN's or P notes action taken by SEBI is not unwarranted as some would say. SEBI has actually tried to control the quality of funds and not the inflow of funds. FII's who are still bullish on the India Story will still be interested. It's just that the regulator initated at the wrong time for the raging bulls.

However things should not be gloomy and markets are still fundamentally strong when you compare with other bubbles in the past. Japan stocks traded at an unrealistic P/E of 100
at the high of the Japanese bubble. So, we are still miles away from that kind of bubble but it is good be cautious because Precaution is better than cure.

A word of advise for the retails investors. When your doodhwala and panwalla starts investing in stock markets, its time that you make exit.

14 comments:

Anonymous said...

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Past correction was quite good for stock market as many fresh buying levels were created in Nifty and Sensex


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Anonymous said...

Dear Visitors,

This blog is really nice and informative. We do think our posting will be highly beneficial for you too. From past few days we have witnessed
major downward rally in Indian stock market along with other major exchanges. It was there due to fear of recession in USA which is major economy.

But if we talk technically then Indian stock market is set to go up but still trend is not clear as few indicators are giving buying signals and few are still giving selling
Indications.

So we suggest everyone to wait till
Nifty touches 5350 before taking any long position.


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Anonymous said...

Dear Visitors,

This is our great opportunity to post comment on this knowledgeable and useful blog.

As we all know USA is heading toward Recession. Which is effecting movement of world markets reason being USA is major economy hub.
Now Our Budget is coming up on 29-Feb-2008 which will act as triggering movement for Indian stock market. We are expecting positive
Budget which will help the Bse and Nse to further move up. Still major support is 4200 now and on upside check out 6000 level soon.

Thanks

Sharegyan

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www.ShareTipsInfo.com Team said...

Hi Everyone,

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Positive news for farmer which can give rise to agro based industries too.

Overall budget was good for everyone.

Now with time USA is coming out of the jinx of sub prime and recession and we have already witnessed some good movement in US market too. Recent fall in Indian stock market was due to Overbought Nifty, USA recession margin pressure and panic.


Now Nifty is in consolidation phase. Once consolidation is over we will see major rally in the stock market.


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KnowYourProfit said...

This blog is novice and informative visitors will surely be benefitted,Its our pleasure to post
Informative content on this useful blog created by webmaster.

As such the new Financial year has been started we wish all the visitors Good Luck , further the new support levels for
Nifty is 4650-4610 ,we can a see a rally coming in few days to boom
Indian Stock Market

Sectors whichs seems to gave good return over the period are

1.PHARMA
2.SUGAR SECTOR

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KnowYourProfit said...

This blog is novice and informative visitors will surely be benefitted,Its our pleasure to post
Informative content on this useful blog created by webmaster.

As such the new Financial year has been started we wish all the visitors Good Luck , further the new support levels for
Nifty is 4650-4610 ,we can a see a rally coming in few days to boom
Indian Stock Market

Sectors whichs seems to gave good return over the period are

1.PHARMA
2.SUGAR SECTOR

Get all your queiries Answered Related to Indian Stock Market

Once Again This New Financial Year Brings Charm to Your Life.

Regards

Team
KnowYourProfit.com Team

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Anonymous said...

Hi,

Once again after crash Nifty has started going up. Now we suggest all rises should be used as an opportunity to exit old long positions.
This bull run will continue for few more days. Overall market is in bearish mood as in medium term its just a small rally due to short covering
and result season.


Happy Trading,

ShareGyan

Anonymous said...

Hi,

Once again after crash Nifty has started going up. Now we suggest all rises should be used as an opportunity to exit old long positions.
This bull run will continue for few more days. Overall market is in bearish mood as in medium term its just a small rally due to short covering
and result season.


Happy Trading,

ShareGyan

KnowYourProfit said...

This blog is quite nice and informative, it is our pleasure to post a comment on this usefull blog created by a webmaster

Now as such we all know that in India Elections are just around the corner which would inturn effect the movement of the
Indian Stock Market which means the time has come when a common man should start thinking of investing in the Indian Share Market
which would help him to increase the invested amount because one should not avoid the Opportunities come in Daily Life

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sharetipsinfo said...

Hi,


The market is currently enjoying a good rally which has seen most stocks gain from competitive advantage and it would be advisable for all stock market enthusiasts to seize this opportunity and plan their investments in a safer yet conducive stock market. With NIFTY hovering around 4800-4900 +, it is expected to take hold of this currently rally and be realistically be closest to 5000 more so than before in what should be its new 52 week high.

Lot many untouched stocks are still there which are ready to blast any moment.



Regards
SHARETIPSINFO TEAM

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