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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