Indian Stock Markets – Is this the Buying Time?
Posted by Sandeep Abbott on August 22, 2007
The fundamentals of the world economy are under the cloud. The risks of huge and persistent imbalances in the underlying environment are now begining to unfold into accidents. The stocks markets around the world are therefore falling . The die hard bulls have turned cautious and the popular pundits seem confounded.
In this environment one question that one gets to hear the most is whether the decline so far in world markets has exhausted itself ? and if this is the buying time?
To me this is just the begining of massive unwinding that has just got triggered by subprime mortgage defaults in US. There are many other risks of imbalances in the global financial environment that shall get activated by fall out of current crises. It would therefore be prudent not to jump into the stock markets taking the current fall as correction in a bullmarket. The current fall is more likely to be the start of a long bear run. This, therfore is a better time to sell than buy.
Reflecting at the recent movements in the markets, I expect some upward correction after the good fall of about 2000 points in Bse Sensex ,from its all time high of 15800 level in July 2007.The magnitude of correction could range between 500 to 1200 points . If this expected correction materialises , it would present a good opportunity to sell out.
Sanjoy Banerjee said
The currency and the stcok market seems to be very closely linked to the USD pricing. With the artificial boosting of the crude prices again linked to the dollar currency the demnad for the dollar is likely to increase . The expectation is that the portfolioinvestement flow out will face resistance and lead to a rise in the sensex in the Indian stock market. With better than expected results from the IT sector ( partly due to the depreciation of the rupee viz a viz the dollar) the stock market should get into a slow upward movement instead of anything spectacular. Holding stocks with a six month view may not be a bad idea if investors have bought stocks at 15800 sensex level . Sensex should touch 18000 level by that time