Sunday, January 17, 2016

Stocks at Attractive Levels

The markets continued their downward momentum picking up from the first week to lose another 2.2 pc. There is an environment of doom and gloom everywhere. Let us look and see if the things are really as bad as they seem.

1. The Results season has kicked off and Infosys has shown that innovation still leads to out performance. TCS seems jaded and Infosys seems on an upswing. It is a cyclical story and the baton keeps swinging between the 2 giants.

2. FIIs have sold and sold big in 2 weeks of Jan 2016. Almost 7500 crores worth of shares. This is a huge figure and the DIIs have bought about 5300 crores. There are various bond issues sucking out money from the markets. The FIIs are selling not becuase they have given up on India but becuase they are under pressure to bring money home.

3. China slowing down has lead to commodity prices coming down and India is best poised to take advantage of this. The money one puts in now will definitely reap rewards 12 to 18 months down the line. If we take the worst case scenario of Jan 2008, then at that time in time of panic the stocks bounced back in March to give 20-30 pc returns before again falling down.

4. Every 2-3 years such scenarios come in the Market and that is the time when the stocks are to be tanked up. If everything is falling, then one cannot question why a particular stock is falling down. The Budget session and the passage f the GST Bill becomes very crucial at this point of time.

5. The Sovereign Gold Bond issue is another option for those who want the safety of Gold and earn 2.75 % interest per annum.

6. Technically, we are approaching the support zone of 7200-7400 and from where the markets can bounce up 400-500 points. Whether this is the last leg of the fall is not clear.

If A was 9119 - 7940 = 1179 points
B was 7940 - 8654 = 714 points

C should be  7475 already achieved or 7154. Technical Analysis is an art not an exact science so we may well be in the last leg of the fall.

The best approach is buy fundamentally strong stocks, be prepared for lower levels and be open to averaging. Folks should be willing to stay in the markets not get worried by everyday falls. The Best money is made in the scenario prevailing today.

1 comment:

  1. Hi, presume you would be tracking Tony's blog as well. Wonder how India reacts if his view is accurate. Thanks.