Struggle to make money from stocks

The recession in the world economy will take time to look up. The US is right now a year into recession, with unemployment rates reaching scary rates, not seen for many many years. The Big 3 automakers are in real trouble right now, fighting for getting funding from the US Government, and right now, that funding looks in trouble since the US Congress has refused to grant such a funding. Companies have been firing people left right and center, forcing much more instability into the entire economy.
The market in India has also been severely impacted, with growth in many industries and sectors very badly impacted - the realty market is down, rentals are down, auto industries are down, consumer durables are impacted, and so on.
The market remains depressed, and even the announcement of a reduction in petrol and diesel prices, along with a Government push to go against its fiscal responsibility norms and push more money into trying to pump up the economy and growth in the infrastructural area has not had much of an effect to the market. Even when the market goes up to some extent, there is always the worry about how transient this growth is, and there is always an expectation that the market would again fall down. Right now, the sentiment remains negative, and people who have invested money in the recent past have also lost market, making people apprehensive about investing more money in the market.
Typically, as per all market literature and investment books, this would be a good time to invest in fundamentally good companies, but the upside will take time to achieve (maybe upto an year).

Labels: Future, Oil, Recession, Stock

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The Indian stock market is getting very badly caught up in the global problems. If you look at the overall trends that affect the market, rising inflation and increasing commodity prices (especially foodstuffs and crude oil) were the critical factors that were affecting the economy. Those seem to be slowly on the way down now, with crude temporarily falling below the $100 mark, and the rise in the commodity market slowly coming to an end. These are all good signs for the economy.
However, when the US economy sustains problems, these cause problems for everybody. The rapid decline of some of the largest financial corporations such as Lehman Brothers, Merrill Lynch and AIG have both a direct and indirect effect. They have cross investments in many Indian companies, and can be trusted to sell these as soon as they can. In addition, they are a harbringer of a long term problem in the economy, and leave people with a bad feeling, something that translates into a bad sentiment.
Overall, I know people who are slowly gaining small shares in the market, but at the same time, they are also worried, since even investments bought a few weeks back have fallen. The textbook approach is to keep on making small investments into fundamentally sound companies such as Airtel, Reliance, Tata, and for a risky touch, into some companies that have fallen very badly; they are the ones who are expected to rise within a few months of a recovery and can promise high returns (but I repeat again, this is risky).

Labels: Equity, Future, India, Inflation, Oil, Stock, US

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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.

Labels: Equity, Future, India, Inflation, Oil, Stock

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I am writing this blog on a more infrequent basis, given that the market is really not doing anything great nowadays ? With the continued climb in the price of oil above $140 per barrel, and inflation crossing the 12%, there is a massive onslaught on the equity market, with almost confirmed speculation that the fast rise in the realty market over the past few years has come to an end; that real estate deals are down, and that many smaller players are having a harder time.
I am still holding on, given that I believe in 2 things:
1. All my education years wherever I have studied either finance or economics (and specifically the equity market), there has always been one standard logic. When the time is down, when people are not buying, then this is time to buy. I still believe in that, and so prefer to look out for some great scripts that are available at pretty reduced rates now (such as Reliance, Infosys, ICICI Bank, Tata group, etc)
2. Secondly, over a long term, equity market has always given the best results, and this crash has been happening for a period of 6 months so far. Previous crashes and downturns have gone on sometimes for much longer periods, but there has eventually been a recovery.
At the same time, I will not deny that the situation remains painful. Timing the bottom of the market in this situation is very hard (you buy a script, and then it can fall much further); and the participation of retails investors, FII's and domestic FI's are all very low.
So, I keep on watching and monitoring. What do you people think ? What is the future like in the short term and long term ?

Labels: Equity, Future, India, Inflation, Oil, Stock

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