Are'nt these markets OVERVALUED?

shorttermer · #1 15th December 2005, 09:42 PM

Hi all,

just want other member's reactions to this mad rally and ensuing volatility... 9300? and its only the large cap space that has rallyed like this... when it goes down suddenly, it takes everything with it.

i think 7600 is the right valuation for sensex and so over 8100 it gets really scary stuff.

any opinions?

shorttermer

neel1002 · #2 15th December 2005, 10:49 PM

I also support your IDEA. I am expecting a vertical fall of the sensex shortly which will temporarily fall down to 8500 level and thereafter another free fall below 8000 mark. Everybody should keep finger crossed.

Agilent · #3 17th December 2005, 12:26 AM

Quote:

Originally Posted by neel1002

I also support your IDEA. I am expecting a vertical fall of the sensex shortly which will temporarily fall down to 8500 level and thereafter another free fall below 8000 mark. Everybody should keep finger crossed.

I can understand your pessimism ... what you are saying is that a steep correction is overdue(like the one which happened in Oct ... see link linkhttp://finance.*****.com/q/bc?s=%5EBSESN&t=1y&l=off&z=l&q=l&c=).

But do not forget :
- Sensex 9500 is within striking distance, and when that happens..10 K will act like a psychological magnet. If you are familiar withe concept of SFP (self fulfilling prophecy) you will agree that 10K as SFP is a reality just waiting to happen. Maybe a short correction may happen before then, but that will only add more strength to the ensuing resumption of the bull run !
- Some Japanese and Saudi funds are now beginning to invest in India
So there is growing inflow on the cards
- PE multiples are still not excessive ... and don't forget this :if EPS growth remains robust (which it will) PE multiples will tend to go higher and higher. In simple words, if India Inc is minting money, markets will continue zooming)
The long term trends will turn negative ( ie Bear market onset) only when a longish recession is imminent ... and that cannot be seen at least for another year, INHO

Lets have some other views .... ?
AGILENT
PS Undertone at close was quite bullish, so market should open with a Gap up on Monday... lets see ..

Agilent · #4 17th December 2005, 12:33 AM

Here is that link which I refer to abovehttp://finance.*****.com/q/bc?s=%5EB...off&z=l&q=l&c=

vince · #5 17th December 2005, 07:25 AM

Hi neel1002 and agilent,

The markets are going to do what they are going to do. I feel our energies would be better utilised in trading them instead of trying to predict them ,which more often than not proves to be a futile excercise.

Trade well friends.

Thampi · #6 17th December 2005, 01:17 PM

Hi Vince,

I agree 100% with your feeling that prediction is a futile exercise .Having said that ,please imagine a hill with a huge rock sitting on top and say it keeps getting bigger as time goes by.Even if I see a very nice plataue below that rock I would refuse to build a house there.Am I trying to predict that the rock is going to fall? In any decision to take a position in the market it is a trade off between risk and reward.As the market goes higher and higher the potential risks start outweighing the potential rewards at which point the smart money gets out.

Best regards and happy trading

srisara · #7 17th December 2005, 02:07 PM

lot of people failed and lost in trying to predict the martket.

trade as you wish and keep your S.L intact.

I one day feared why Sensex crossed 6,000 today it is @ 9000 and still i am trading.

Satya

mohanlate · #8 18th December 2005, 12:44 AM

Hi All,

Yes the markets look expensive. And though Japanese and Saudi funds are lining up, we dont know at what levels will they come in. Will they buy at these levels? Or will they wait for a fall? They are not momentum players.

Agree with Agilent on India Inc. story. As long as fundamentals continue to be strong, markets will continue to reward their performances. But let us not forget what happened in US in 1999. NASDAQ was trading at a P/E of 32 (CISCO was trading at a P/E of 130).

But this is only one way to value the markets. On the basis of relative valuations, Indian markets may appear expensive as compared to other asian markets and may not attract FII money. And yes, our markets are still controlled by FIIs.

It is important to have some idea of the direction of market while trading. Otherwise all your trades are going to hit the stop losses on their way down. And in a crash scenario , they might not even get triggered !!!.

Agilent, can you please elaborate on the Self Fulfillling Prophecy thingy? What do you think is FII's SFP?

I always keep an eye on the Sensex and Nifty charts. And read AMITBE's NIFTY FIFTY thread without fail. We have to be cautious at these levels. Be little more strict with SL's. I am sure that through detached execution and solid risk management, we can make it "work".

More views please.

Thanks,

Mohan

shorttermer · #9 19th December 2005, 08:19 PM

Hi Agilent, Sri, and Mohanlate,

I do agree with agi's and sri's views... just expressing concern of difficulty in trading when the FIIs are messing evaluations too much with excess money... just as mohan said sls get triggered sometimes unnecesarilly, sp. if you dont trade in Nifty Fifty stocks.

true the india story is strong and corporate results are +ive, but these levels are way over-done! sri i agree with what you said abt the scary 6000 levels... and still at 9000... good job!

agilent, as mad as the spf theory is, yes it i think it defi. is coming into play last 12-18 months of indian capital markets... i agree abt the 10000... and good call on the monday opening... bullish bang on!

mohan, im a big fan of yours after reading your thread... autograph please....lol ... no seriously, good job in your thread.

shorttermer

PS - no way i give way to emotions i trade fearlessly with more risk management as mohanlate said... go go go

Agilent · #10 20th December 2005, 02:29 PM

Thanks Short for yr kind comments ..

Will soon scan some interesting stuff abt Self Fulfilling Prophecies (SFP)

Menwhile be good enuf to read my new post of last nite on "Crazy chart..." and try solve the riddle I have posed there

Many thanks

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