Nifty touched below 4600 and back. I believe these interim downward rallied will continue for a while till a 4200-4400 base is formed. Traders may also be wary to play this 200pt range now. More than global factors, its the absolute collapse of governance domestically which has caused the weakness in markets. These problems were there before...but like they say, in a bear market everything gets magnified! Fiscal Deficit woes may continue unabated considering the rupee situation and consequent inflation, which remains subdued but sticky. My sense, two more quarters of very bad earnings for corporates, then the new normal where markets have fully adjusted to downgrades.
Stock picking should be done now. Lot of stocks are near their all time lows, most at their 52 week lows. Like RIL, BHEL (yes even BHEL!), Hindalco have tremendous upside for an investor with the courage and patience to hold on. Also like Mundra, G E Shipping, M&M, Exide and Dabur. Understand that except Dabur all these are cyclical plays. So basically when the cycle turns...right now seems far away...is anybody's guess. But what we know for sure are these are stocks with proven business models and are winners. In the financial space as well HDFC Bank is available cheap.
LT, Adani, GAIL can also be looked for some entry/accumulation/averaging...depending on when you entered the markets! Debt yield can be locked in fixed intruments for a longer duration as I believe this may be the peak of interest rate cycles in recent times.
There is light at the end of the tunnel...once we see it...markets will rebound...you do not have to even reach there!
Showing posts with label Global Economy. Show all posts
Showing posts with label Global Economy. Show all posts
Tuesday, December 20, 2011
Monday, October 10, 2011
The Pain Continues....
The pain continueth....as they say! 2011 has been a difficult year, with what everyone expected but did not really want to believe, that the world would collapse.
Lets face it, the developed world, like it or not, has collapsed. It is time for soul searching. What went wrong in Europe (PIGS) and USA? Living beyond means? Not having enough "real" assets to back paper stuff? We can dwell into the depths of what happened but it all boils down simply to this!
India in the past has grown despite the political and business setup and not because of it. The same may continue...even now our economy has the pizzazz to deliver 7.5% growth. I will take that anyday over sub 3% global growth....any friggin day! The consumption theme may fizzle out now, given the fact that there has been a concerted effort by the Reserve Bank of India to hike rates. Its bloody expensive to buy anything on credit now and the retail guy along with the SME will suffer most. This is delaying the capex cycle more than slowing consumption but eh...the transmission effect takes time. Also we have to factor in the rural economy which is largely cash based and the underground economy as well!
So what is in store for the markets? I am afraid six more months of sideways movement...some day gains here and there, probably an astute trader can make money during this time frame. But for us fundamental investors, time to shop, keep a 3 yr horizon, chances are that you will not regret buying during this phase!
Lets face it, the developed world, like it or not, has collapsed. It is time for soul searching. What went wrong in Europe (PIGS) and USA? Living beyond means? Not having enough "real" assets to back paper stuff? We can dwell into the depths of what happened but it all boils down simply to this!
India in the past has grown despite the political and business setup and not because of it. The same may continue...even now our economy has the pizzazz to deliver 7.5% growth. I will take that anyday over sub 3% global growth....any friggin day! The consumption theme may fizzle out now, given the fact that there has been a concerted effort by the Reserve Bank of India to hike rates. Its bloody expensive to buy anything on credit now and the retail guy along with the SME will suffer most. This is delaying the capex cycle more than slowing consumption but eh...the transmission effect takes time. Also we have to factor in the rural economy which is largely cash based and the underground economy as well!
So what is in store for the markets? I am afraid six more months of sideways movement...some day gains here and there, probably an astute trader can make money during this time frame. But for us fundamental investors, time to shop, keep a 3 yr horizon, chances are that you will not regret buying during this phase!
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