*** Deep Thoughts on Market ***

Friends:

Screw all the various views and reasons for why this market is falling and whether this is a bull correction or a bear erection :-)

The simple facts for the current pain, assuming you are all bulls with balls squashed hard:

1. The US has proved that it, and only it can run the world. Interest rate hikes in the US are the only reason why the world's markets are tanking. Rest everything is peripheral. Inflation is key and that too frigging US inflation.

2. I know psychological assualts have taken their toll, because today, for the first time, I heard someone say the Columbian stock market hads crashed 10% and was closed down on circuit. Unusual because we Indians are not even concerned of Karachi.

3. Today's fall of the Nikkei was fueled mainly because Bank of Japan's governor said that before he became governor, he had invested in a mutual fund run by Yoshiaki Murakami, who was last week arrested for insider trading.

Most of inflation depends on oil, and unlike in India where the price of oil is controlled, the US does not have such controls, and consumers get affected immediately by any increases.

Good news is that US inventories of oil is rising, a weak hurricane season is in offing, winter will be mild, Iran may compromise.

Oil appears to be falling! This may be good for the US economy, as the interest rates, used as a hedge for inflation, will not rise.

All eyes on Bernanke. This man will decide the world's markets for the next 6 months.

cheers,
nkpanjiyar

courtesy:R Seth

Some Simple 3 Line analysis

"Its going to go up 100% sure.It will go up" <<= this guy has already purchased.
"Can it go up, mkt kya lagta hai?" <<= this guy is mostly in cash
"This is gona crash, India is doomed" <<= This guy sold all his shares.

the simplest idea is that humans ("weak humans") cant utter things which they are scared of.
And would say things which gives them a sense of confidence.

Armed with this logic its easier to know who is invested and who is in cash.
and then talk to 50 people and u get a fair idea on what can happen...!!
I have yet to see one person who defies this logic.

it is very imp to listen.
one shoudl have his views.. even then keep 2 years open to listen..

note the words Will, May, Can, Sure, 110% etc...

Well You forgot the fourth kind. Who made money in bull run and is now in cash and wants to get back in once sign of bullishness return and doesn't want to make moey when it goes down nor does he want to loose it, has faith in market but doesn't live off it but aspires for growth.Those who think market is a one way ticket that it either goes up or down only are f**ls.
Pankaj

If you ask me. I won a lot in falling mkts. The stuff I sold high up are cheap now.
Its like u sold mango at 100 rs and its at 50 rs now.
Who cares for watermelon if mangoes are available!
People who hold shares loose.. people in cash dont..!!
I am happy when I see -ve news zooming around. Every piece helps..!!

Jhunjhun wala never uttered the word "excesses" during upmoves?ask why??
since he has so much equity...
now he used the words "excesses" since he accepted the losses.

Interpreting volume is not a direct aim and shoot game. Explanations vary with mood and time etc. Yes volumes dropping down in falling mkt is good. Normally signifies less pressure.
f**ls is a relative term!

This is what some analyst gave their outlook on TV –

§ We are in long term secular bull market (I don’t know what this means?)
§ Anyway, then we are in bear market in this long term secular bull market (Interesting)
§ Then, we are in intermediate uptrend in this bear market (Very interesting).

Now, if we go down on Monday, then they may say, we are in correction in this intermediate uptrend. So simple!!!

Anyway, to be honest, I term this rally just a bounce back from strong oversold conditions. I have only one question – If India story and Valuation logic is so strong – Why market sold off as there is no tomorrow? There is something big which we are missing, or somebody is making fool of us. It’s tough to say.

Investors, plz don't buy till market settles down.

cheers,
nkpanjiyar

Bull markets are always driven by liquidity. Liquidity is always driven by low interest rates. World over, all central banks are tightening the liquidity, and there are no clear signals that they will stop any time soon. China is the latest country to join the tightening bandwagon.

The reasons global equity markets sold off still remain – Inflation, Oil and Fed. Inflation data came worse than expected. Oil hovers above $70 and Fed policy is now hazier on where they will stop. Fed fund futures have now fully priced in an interest-rate hike at the Federal Reserve's next policy meeting on June 28-29, and chances are at about 70 percent for another increase in August.

India story is still strong. But the issue is - we do not have domestic money tankers to take the market up on our own. We need FIIs support, and that support will depend on global liquidity. So, there’s no point singing a tune (Valuation) that does not move the market.

cheers,
nkpanjiyar

Exactly also I think personally the inflation data that is provided is false.Its way beyond what is projected.And its a worldwide phenomenon.

Hi nkp

These concerns are there from a long time and and move the market for short time at any given time. Market buys and sell off not based on Valuations alone but primarily it is herd mentality that dictates buy and sell decisions for large number of investors. The price movements in technical analysis presupposes randomness of decisions. But when a small group of players have the power to influence technical parameters by selling or buying in large numbers such presumptions give way. They act like shepherd so randomisation is gone.

Somewhere I read one more thing. A persons decision to by a stock at certain price is largely emotional but subsequent actions are quite dependent on the entry price. So if a person brought during last six months would have seen his capital erroded by fall in valuations and would have resorted to selling to save his capital and profit if any. So supply will remain strong at different price levels.Companies valuations will paly a role in the long term only and not on the short term basis. If one had ACC at 350 in 2004 would he be worried much now. Of cource he can act rationally and decide to book profit and then enter at lower level etc. If he feels that company is going down he would shift to another. But in other cases one would move to protect the capital and profit.

May be I am wrong. But I do see infy TCS at a higher leve one year from now even with the bonus. There are quite a few story. Investing is always a stock specific idea . But if country is going down the drain like iraq afganistan what future do we would see for our children and what growth prospectus will be there for ordinary people and the hope. The market will not rise because of fundamentals in all such cases but because of gambling or manipulationsor for some other reason. Economic growth will not be one of them.

I see a bright future for my country, NKP. I see lot of development taking place and also potential for it. If you had no faith in future you would have invested in gold and gone to some other country , other then balkan countries like serbia, bosnia etc.

Well, we have to protect our self. FII can bring many things including money but they cannot infuse in us the commitment to growth. It is for us to do that and to believe in that.


I agree with your decision to wait . let dust settle down first. Plenty of time to take investment decision .
Pankaj

Ditto Pankaj. I agree in toto.

THE FII IS VERY RUTHLESS. HE IS NOT HERE FOR OUR HEALTH AND DOESNT GIVE A DAMN FOR OUR COUNTRY. HE HAS COME HERE WITH A PLAN AND HEAVY POCKETS. UNFORTUNATELY FOR HIM HE HAS NOT BEEN ABLE TO TAKE TOTAL CONTROL OF OUR MARKETS (Since there are too many monkeys in India , he underestimated the intelligence and capabilities of the indian langur , in fact in places like varanasi and even the older town area of Mussourie the monkeys have taken over and driven the humans out).

Our country was the "Jewel in the crown " but slowly it is turning into the crown jewel .I wont be surprised if some companies from the FTSE start listing on the Nifty. I strongly believe India will command global economy in coming years.

cheers,
nkpanjiyar

FII's are here to make money cause that's their, job but i don't agree to the statement that they don't have control on this market. The liquidity in this market dried up temporarily, just because of the fact the FII's stopped pumping in money in to the market. Our domestic funds proved that they will not be able to provide liquidity to this market single handedly, as it turned out to be during the recent fall. Indian Stock Markets need FII's to provide them liquidity and in its absence will witness a prolonged bearish phase as our retail investors or HNI's or mutual funds are incapable of carrying this market forward.

FII's dumped KOSPI a couple of years earlier but KOSPI continued to hold its stature with the help of retail invesotors and domestic fund. But i don't think this would be possible in the case of India, if FII's pull out all the 45 odd billion dollars invested in India then we could see the end of a great era for Indian Stock Market.

In future India may become economically strong but America will continue to be the Sun and all other countries will be dependent on it in some way or other. If America and Europe Shines we do shine and it will never be the Vice Versa.

Thank You,

A.K.Siva