After a long time I am posting something about stock markets. The reason is everyone was bearish and no one was ready to listen to ne thing negative so I stopped posting. And thats 100% true. Now I am seeing people coming back (especially my friends who were trading aggressively in the last bull run) and asking me about their holdings and talking about stock markets especially after the 2 upper circuits on back of election results.
Just before few weeks most of the analyst described every rally as a bear market rally. No one was expecting the NIFTY to cross 3800 levels. Everyone seemed to be bearish on market. Everyone was backing their views by talking about bad economic conditions, negative global cues blah blah.. Now with the election results things seem to have changed totally. People are no longer talking about global cues, economic condition and it seems that bulls have returned into business. Now suddenly India seems to have decoupled from global markets. and with the same govt coming into power people have again started talking about 8% GDP and so on.
What has changed in these few days that people have forgotten every thing and are just buying blindly? Brokerages are talking about 20k levels on sensex http://in.news.yahoo.com/48/20090520/1237/tbs-market-watchers-predict-new-high-by.html. FII’s suddenly overweight on India and you will see every thing turned Bullish from Bearish. (Especially those who were bearish just 2 weeks back 🙂 This sounds really funny to me but most importantly its very confusing for those who are stuck with their holding which they bought when markets was @ 18k-20k and are thinking to hold or sell.
According to me the current movement in the market is because of over excitement and is overdone. People are putting in money blindly since there is a left out feeling. Every thing is moving up.. Personally I don’t feel that this rally should sustain. People already holding stocks should book out profits and stay with cash. “CASH IS KING” and no one will argue that. Profit booking to my mind is never a bad thing to do. If your investments have doubled book out capital and hold on to the profits. I just noticed that even companies which have posted net loss are moving up 10% – 20% every day. Reminds me of the last leg of the bull rally when each and every single stock was moving.
Ne ways having said that I think one must book profits and we could see nifty coming back to 3800 levels or even less going forward. And as and when economic conditions improve one should again start investing or buy stocks which are available at dirt cheap price going forward.
Though I cannot term this move as a bear market rally or a bull market but I am sure about one thing that the valuations doesn’t seem to be cheap any more and economic environment has not changed. So profit booking will be the ideal strategy.
Hope you have liked this post. If you have any questions pls post a comment and I shall reply.