Monday, February 04, 2008
India stock market update 05 February 2008
Signs of the bloodbath on the stock market are everywhere. People are hesitant to invest anymore, and the fear of the US recession is scaring the wits out of everyone who is invested in this market. And then you have the long list of people claiming that this was what they always warned out; one word of advice if you start believing in somebody who claims to have predicted the fall. Out of the thousands of people who consider themselves competent to give advice on the market, most of them knew that the market was at a high position, but almost nobody would have predicted the severity of the fall. In addition, there were many other people predicting that the market would go higher, so take all claims with a pinch of salt.
The current situation is that there is a crisis of sentiment in the market, with the constant pulling out of funds by FII's scaring people. That trend seems to be slowly coming to a halt, and on the positive side, the liquidity crunch caused by the massive withdrawal of money for the Reliance Power IPO seems to be subsiding, money has been refunded to people.
What are the positives ?
- India is still growing (with the caveat that the high interest rate regime by the RBI is affecting credit and growth)
- Sectors of industry are affected by the gains of the rupee vis-a-vis the dollar, and it is likely that these sectors will continue to hurt (textiles, IT, and many others)
- Equity remains the best growth medium around in the long run
- Liquidity in the system needs to find an outlet, and those are typically either property or equity, or a combination of both
- All expert advice is normally that when people are selling is a good time to buy (especially when considering the above factors)
What to do now ? Evaluate stocks that are in a growth path or are not in an industry that is in a slow-down, and based on fundamentals of the stock, decide on whether you want to buy or not.
Stocks that I am currently tracking:
1. Hindustan Construction: Rs. 190
2. Nirlon - Rs. 112
3. Almondz Global Securities - Rs. 82
4. Assam Company - Rs. 36
5. English Indian Clays - Rs. 2100
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The current situation is that there is a crisis of sentiment in the market, with the constant pulling out of funds by FII's scaring people. That trend seems to be slowly coming to a halt, and on the positive side, the liquidity crunch caused by the massive withdrawal of money for the Reliance Power IPO seems to be subsiding, money has been refunded to people.
What are the positives ?
- India is still growing (with the caveat that the high interest rate regime by the RBI is affecting credit and growth)
- Sectors of industry are affected by the gains of the rupee vis-a-vis the dollar, and it is likely that these sectors will continue to hurt (textiles, IT, and many others)
- Equity remains the best growth medium around in the long run
- Liquidity in the system needs to find an outlet, and those are typically either property or equity, or a combination of both
- All expert advice is normally that when people are selling is a good time to buy (especially when considering the above factors)
What to do now ? Evaluate stocks that are in a growth path or are not in an industry that is in a slow-down, and based on fundamentals of the stock, decide on whether you want to buy or not.
Stocks that I am currently tracking:
1. Hindustan Construction: Rs. 190
2. Nirlon - Rs. 112
3. Almondz Global Securities - Rs. 82
4. Assam Company - Rs. 36
5. English Indian Clays - Rs. 2100
Labels: Equity, Future, India, Liquidity, Stock, US
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