Thursday, September 16, 2010


Indian stock market update as of 16 September 2010

The Indian stock market is getting very volatile nowadays. It reminds me of the days near January 2008 when the market was very volatile, with the Sensex going up by large numbers or falling, but with most stocks remaining where they were or sometimes even falling. There is still money to be made in specific scripts, but it is a high risk / high gain approach. If there is a fall due to liquidity inflow into the system being reduced, then even scripts that seem safe can fall pretty fast (we have seen the effect of what a reduction in liquidity and bad sentiment can do to all stocks in the multiple falls that happened in 2008). Right now, DII's (domestic financial institutions are selling) while FII's are pumping in money; but this inflow is always volatile. Every expert says a couple of things - India has a good economic growth ongoing, and Indian stocks are expensive. The possibility of a small sharp correction is pretty high right now, so be careful about the stocks that you are going in for.
There are positive news for the medium and long term - the figures for industrial growth were higher than expected, which means that Indian industry will pick up; at the same time, there will be a need for more credit and working capital, as a result, most predictions are that the Reserve Bank will increase interest rates to head off the expected increase in inflation.
Some stocks that I am currently tracking:
Reliance Industries - the stock remains a safe bet, and has shrugged off some recent weakness where there were predictions that the stock could fall to 600 levels
Uflex - the stock has run up sharply in the last couple of months, but the company remains a fundamentally good company in a good sector
Kirloskar Pneumatics - Run up a bit in the last 1 month
Rajesh Exports - Looking good technically
Rama Newsprint - A turnaround story
Shanti Gears
Cosmo Films

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