Wednesday, August 27, 2008


India stock market update as of 27 August 2008

The market is right now in a zone where people with courage (and a hint of bravery / foolishness) in their blood will go all out to try and invest in. There are many contradictions galore right now - most books mention that periods of slump are the best timings for buying good scripts (and even for buying volatile scripts that have heavily declined in value). So the current time should be a very good time for buying such scripts. At the same time, there are many problematic signs still there on the horizon - crude oil is currently low, but it takes a bit of geo-political tension to get it high again; inflation rate has gone down slightly but is still over 12%, and the RBI will still continue with its growth-throttling mechanisms; on the political economy front, the Government has still not come out with the proposed new economic reforms law; overall, the current horizon still has a lot of grey clouds.
The positive thing is that company results are still coming out good and the expected drastic drop in profits has not yet happened. Many individual sectors such as auto, airlines, stock broking, etc have suffered, and stocks in those areas are still to take a lot of pain. However, the overall scenario is looking slightly better.
Time to resume active buying ? A tough call. The market is supposed to be an active reflection of the situation 6 months into the future, and by then, things would have improved; so the advice remains to be buying slowly into fundamental companies, and think about investing small amounts into the more volatile companies (if you want to play the risk game).

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Tuesday, August 12, 2008


India stock market update as of 12 Augist 2008

For the past couple of weeks, we have seen the market rise from the lows of mid-12,000 that were seen a short time ago, and the Sensex has been above the 15,000 mark for some time now. This has not been because there has been an improvement in the economic situation over the last few weeks; the inflation rate is beyond 12%, something that will scare most governments to death. Instead, the stock market seems to be doing better primarily because of 2 reasons:
- Results have not been so bad and the advance tax collections seem to remain good
- Oil has been coming down for some time now, and is now 30 dollars below its all time high of $148
However, these remain bad times for the market. It is very difficult to predict as to how long the situation will remain like this. There are regular reports in the newspaper now about the bad situation of many sectors such as automobile, airlines, financial sectors (because of loans reducing), realty, and so on. At such times, it is difficult to stick your neck out and make a prediction that things will get better (and you should be skeptical of anybody who does make such claims without proper reasoning).
So what does one person do in such a situation ? The best possible approach is to continue to make small investments in companies such as Reliance, Airtel, L & T, HLL, Infosys, and other such companies that have good management, sound fundamentals, and the ability to ride out bad phases that the economy goes through.

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