Indian Stock Market - Time to be Cautious

The Markets as they opened today morning have been really heartening. After a downslide over the past 7 sessions, today the markets have opened on a high note, in the positive territory, that certainly a good news for the Investors. But is that really a good news as the sentiments have been positive because of external factor of Fed Interest Rate cut. It has not been on the positive industrial growth or the positive GDP growth as overall factor. Though the morning session itself is volatile after good opening, there still is room for some corrections to come in place during the mid session and the closing session as the pressures are building up.

Overall the time is to be cautious and is to play long term. One should not get carried away with the market fluctuation and should hold the positions rather than trying to square off. Its time to be in the Cash segment for long term rather than Futures.

The Stocks that are to be watched and held for a longer term would include –

Bombay Dyeing for around 740/- as the cue is to double up with a target price of around 1500/-

Zee Tele for around 210/- as the target price could go around 300/-

HCL Tech for around 230/- or 240/- with target price around 350/-

PSU Bank Stocks like Allahabad Bank and Union Bank.

Now these are few stocks that are supposed to go good over a period and hence GOOD Time to purchase them and hold them. But sure to be cautious as while I write this, the Stock Markets have already started shedding the opening gains and are showing too much volatility. Sensex after a good rebound again is hovering around 17000 and Nifty below 5000 mark.

As had written last night, my personal feeling is still the same, markets would not cross over to regain so early as this weekend.

Regards

Mayank Trivedi

Indian Stocks - Market Mayhem Part 2

Tuesday’s Stock Market Mayhem reminded me of the previous post that I had written on October, 17, 2007. And this time post the mayhem, there seems to be a good news “per say” for the market bourses. The US Federal Reserves Rate has been cut by .75 basis points and that as the past suggests would mean the inflow of Foreign Funds (US) would flow in to India and the other Asian markets. That would mean the markets would open with positive note.

Ah but a catch there that US Fed asserts that there would still be downside risks to the growth. Now what does that mean??? Dow still was reeling negative and was not giving much positive indication, so what do we infer??

If we take cue from the Fed Interest Cut then the market should open in positive territory with FFI Fund inflow, but on the contrary, if we take the Dow Jones cue, then the markets would still be on the negative territory.

Here, what is the sentiment of the market players, not the specialists and the experts but those who hail from the retail market and who are the avid watchers of the stock market in India? The sentiment is, that if Market fares better in the coming days, and the Nifty does not fall below 4500 points, it would be able to recover faster. Translating that for Sensex then the circuit break point would be 15000.

Please recall that in my post on October 17 last year I had mentioned that the Indian Stocks are being overvalued and I strictly feel that there should be another correction in the Sensex and Nifty for between 5 to 10%.That means from current prices the sensex and Nifty should be corrected around 15200 and 4550 Respectively. As per the performances of the various Industry Sectors, that would be the correct valuation of the stocks.

For say in the coming days, both Nifty and Sensex go below the levels of 4500 and 15000 respectively, then there are hugh chances that they would hover in the range of 4000 to 4500 and 14000 to 15000 respectively for quite some time. Umm let say till budget time. Post which, if we get a populist Budget, the market would get the support and come over the bearish shadows as they are hovering at present.

Whatever we say, the morning opening Bells would provide us the clearer picture and Wednesday’s Market performance would more or less decide the fate for Nifty as well as Sensex, as to whether they would go below the benchmarks of 4500 and 15000 or they would rebound back. The Opening session and the mid way would be the deciding factor for more…..

Regards

Mayank Trivedi