Investors, think twice bfor selling...

Hi all,

The recent sharp fall in the equity mkts is surely driven by some well - planned moves and is a deliberate attempt by some real big players. As some analyst rightly pointed out that futures mkt is driving the cash mkt i.e. speculation is driving the mkts right now. The motto behind the whole thing is only to enter the mkts at lower levels and this might be done by those Long term players who hav been left out of the India Story and now want to make the most out of it.

The magnitude of panic created is huge and this time the target is not the retail investor but HNIs and Funds. As the data suggests, retail holding in equities is at an all time low as they hav been selling at every rise and FII holding is at an all time high...

This panic may not be a one or two day and the down trend may continue for some more time. Again this panic may not be limited only to the stk mkts...the stk mkt was the first target, the next one cud be Real Estate...

Thus an artificial bubble is created so that it can be bursted.. And in the mayhem, investors sell ay any price as if there is no tomorrow...

Some fund manager in a news channel rightly said that Indian mkts r dependent on FII money and hence will dance to their tune. In other words they can make a boom or a bust as per their requirements...this raises another imp question - If, the stk mkt, which reflects the social and eco moods of the country, is controlled by firangis, is this really an independant INDIA ?

This can be avoided to some extent if Indian funds and insts like LIC, which r sitting on a warchest of money, r told to act, unless of course, the gov itself is not involved in the scene. If the Indian equities r compared in dollar terms, they r undervalued even if the sensex touches 20k.

So Investors, think twice before selling...

NJoy...

wrgrds
Ahmed

Hi
Just couldn't help posting.

Is it artificial bubble? I heard from analysts for past several months that correction is in the offing. When sensex crossed 7000-8000-9000-10000-11000-12000 levels.Each time there was a dip and analyst would start singing dooms day songs. But It breached all levels and may were caught on the side lines sitting with huge funds. Particularly Indian Mutual funds when FII's were net buyers our MF were sleeping. There are many more FII's salivating to come to India and naturally they want to invset at lower levels. Others, who invested early, want to book profit. So they turned net selleres which combined with external factors and Internal factors have hammered the market. They will againe turn net buyers and people will be afraid , having burned their fingerss(only,I hope so). They will take time again to go for investing. By the time they go it will bw time for FII's to book profits and take money home again.

In stock market someone has to loose money so that others make money. Who looses the money. Those who are hasitant and fearful.

What is my advice. For Investors study the stocks and select you choices and be ready to enter. This downturn will present an opportunity to you to enter into the market at proper valuations. In one year perspective you will get good returns. But invest only when things settles down. Those who entered around May 2004 are sitting on handsome profits in most of the stocks and they need not fear this tiny correction(600% appreciation against 30% correction at current prices.)

Signs to look for.

1.Government Of India will take steps to bring some measure of stability (ostensibly to protect already burned investors but in effect to lure the FII's again)

2. Some regulatory measures announced

3. Global factors start looking up , like oil price dip by few cents ( dont worry about oil prices as that story I am listening since it crossed $40), foreign exchange looking up, positive cues being fed to market to improve sentiments. FII's cant make money if gulible indian investors are afraid to enter the market. So they would create the positive atmosphere before entering. Remember FII's are not here to see India grow but to make money out of growth of India, else they would have turned FDI.

4.Foreign analysts , aptly called FROGS ( FOreign Rear Action GoonS), will start their chorus of songs in praise of Indian growth story. Frogs start their chorus before the monsoon.

5. Met Dept. will say Monsoon is good (By the end they might report it to be deficient in say 30 % of the zones, but then it would not matter)

6. Indian inflation Data will be presented in Pink of Colours.

7. Many Companies will report good first quarter income or profit. I am sure their prodigy accountanta and CA's are burning midnight's oil at this time to be ready in time for 1st quarter result a little early.

Some or all signs will occur.

In so far as Indian Growth story is concerned nothing fundamentally has changed. .So keep a list or stocks you want to enter. Take sound companies with good cash flow, sales/turnover growth/ Low PE/ high EPS/ low debt burden/ comfortable cash reserves/good dividend/reduced expenditure/ growth in net profits etc. and are in Sectors which are emerging and /or growing.

Once you had your picks TA comes into play. It will help you decide your entry points(stop losses) and exit points(book profits). Stop losses should be honoured religiously. Exit prices should be honoured prudently or pragmatically i.e. ride as long as it goes up. Raise your stop losses every time based on EOD.

Pankaj

both articles were well articulated ! mahmeds2000 and pkjha30 (job well done , keep them coming )
i too feel its a syndicate plan .. a well executed plan !
the entire week fii's were net sellers to the tune of 2400 crores..on the other hand our mf's were net buyers - 2200 crores
yes u now realise wht was actually going on !
master plan executed perfectly , our operators would have very well had a treaty with fii's askin them not to enter at the these level and they would have loved it (rem they are bargain hunters ).
there was huge leverage position in the f & O as well only to help their cause.
for the long term investors its a dream come true , its a pie in the sky which has actually fallen !
my advise dont short sell coz u never know when they would start buying and u could very well be caught in the wrong foot !

Jesal

Well First of the signs are here

1.Big News splashed across the front page that "No plan to re-introduce Long Term Capital Gains Tax
2. Rules out review of tax pact with Mauritius.
3. PC informed that inflation (in India is under control below 4%)

Sheeps have already been slaughtered. Wolves will be back with bang once frightened sheeps(those who are outside the manger) are comforted again.

Another cue will be FII's turning net buyer, but before that FROG Factor.
Wait for that to happen. You jump when FII's jump. Indian Market is still immature.

I don't track Dow or other markets
Somebody can tell if they are up as and when

Pankaj

Dow was up, i believe 15+ points.

Check money.cnn.com for latest updates on Dow and Nasdaq.

Satya

Hi,

I don't believe this!
Why is it so hard to acknowledge a bubble?
And when do mature market participant's start using the conspiracy theory to justify the markets moves?
If governments could control the economy and the stock markets you wouldnt have had the 1929 and 1987 crashes.
Wake up or should I say grow up.
Have your game plan, use hedges for your trades , take a view and put your money where your mouth is. thats the way you make money.
to quote livermore Regards

Well We don't live in innocent world either.Market or its participants are yet to grow up. Fortunately I am not married to the market in such a way as to affect my fortunes. I have seen how market is controlled. Its all psychological my friend. I don't see our economy changing overnight just because FII's took some profits home. They will be back. This pattern can be observed by buy and sell data of FII's for recent years. When they were not in the market we had harshad mehta and even now ketan parikh and others. How many colluded with them including psu banks to make marry at the cost of innocent investors.
You said it Conspiracy theory. No It is not conspiracy it is the way movers and shakers of the world (forget India) makes money. Small fries have to be satisfied with what they get with the help of TA/FA.

Thats the pattern and not the conspiracy:- big money comes in first and moves out first.
Well Govt does not control the economy. It simply gives policy direction to the market but it may be little too much arcane for stock market to understand. Or is it? Look at the way market reacts to every statement of thos who are in a position to influence the policy. What do you say if FM came out with the statement that Long term capital Gains would be introduced. What was the necessicity tell at this stage when these are not even on the agenda of the Govt at this time. I posted two IT dept circulars in this forum which caused this much of noise. Check for yourself and see how you will be affected.

I will say open up your mind and remove your blinkers and see the world in proper light.

Fundamentally nothing has changes. Economy will continue to grow. If it becomes more equitable we will be superpower. Till then we have to grow. China and India constitute world two largest emerging economy and Consumer market. These two will drive the world growth for year to come and not the saturated economies. The distance we have to cover is very long and uphill task.Stock market may and may not reflect the economy(which I doubt very much) but unless policy makers make serious mistakes we are marching on.

I have also seen those crashes and see where are the indices even now from those levels/crashes.

Remember just because bull or bears say so economy doesn't change in a second. I say open your eyes.

Pankaj

Excellent work.... Worth reading and understanding

Many Thanks
Amit

Did I hear someone say blinkers?

terms like "small fries" and "movers and shakers" are what need some eye opening. There are no "THEY" in the markets, each individual has his/her vested interest.

Cheers

Hi Pankaj,
I fully agree with you. Really good work.

Good news for all the readers.

Wall Street stabilized at the end of a difficult week Friday, closing moderately higher as investors shook off some of their stress about interest rates. The major indices each lost about 2% this week.

Dow, Nasdaq ends up as investors shook off interest rate stress
Dow closes up 16 points at 11,144
Nasdaq finishes up 14 points at 2,194

The Dow rose 15.77 points, or 0.14%, to 11,144.06, after gaining as much as 52 points earlier. The Dow declined 514 points, or 4.4%, in the previous six trading days.

Broader stock indicators also advanced. The Standard & Poor's 500 index gained 5.22 points, or 0.41%, to 1,267.03, and the Nasdaq composite index swelled 13.56 points, or 0.62%, to 2,193.88.

wrgrds
Ahmed