Market positions -Sentiments and Impact

The Height and bottom of the market.

The New year started with big bang and world over all the market participant came with the new target for the market, and the indices world over started to make new highs DOW,Nasdaq,NIfty,Sensex,FTSE,DAX,Shanghai,Hangseng all were showing that we will give you return same as what we have given in 2009.

Then in mid January the real thing happened which was right and just finding the reason to blame others.First came CHINA for curbing the finances ,then OBAMA ,then Japan with low business development and then all that news which were earlier ignored now making big impact and effect.

But what happen was real.It was due,it was necessary and in the right direction. When Fundamental moves in other way then no technical works,all supports were broken before any one can understand.

NOW the big question what we will see in future.

Current Situation:
Stimulus package allover has just done to stop more downward which started in 2008.But they have not done enough to revive the market towards new growth.
Government with low interest rate and high deficit now do not have any more room to give to economy.Just they can go on the same thing or can cut,but cant give more to the economy.Higher inflation and high commodity price are also the culprit which have stopped the economic revival.World over govt. is in loose-loose situation.
The incentive has to be taken back and that to be very soon.

Dollar Index which was in southward direction in 2009 has reversed its trend and its moving northwards. Just see how EURO is going down day by day.

All indexes are trading at very high PE.Which indicates the current price levels are very high or at peak.

2009 given the highest return if calculated on Y-O-Y basis in many years. This type of return were on anticipation that economy will be on track and it will boom more then what was seen earlier.But that was not achieved and sentiments changed.

NOW the big question what we will see in future.
About economy emerging market will see growth ,but developed economy the task is hard to revive.As US and Europe which have real time data of every aspect of economy on real time basis,this all indicators are giving conflicting signals as some show upward and some down,this made the policy makers work so hard that they are not coming with the best. To much in mind gives nothing.
About stock market short term we will see down trend till June.We think the commodity rates will come down with the stocks till June,and if same happens the medium term outlook will be good and in longer term we will see new highs.

Psychology : Investor who becomes trader in shorter period get panicked in this situation and they sell every thing at market rates. And this situation will arise just we will see when the down fall start in coming days. Currently as per short term all indexes are at there support levels,and other indicators in negative zone which clearly indicates that there will be more down fall then upward.


What to do Now?
Every rise sell- sell .Get out of the market before 15Th of FEB. Currently all indices will be very volatile and the day traders will burn there fingers in even on the day index is up.There will some rise in indexes in coming days and more action will be seen in MIDCAPS(MADCAPS),But this will be from Punters to just transfer there holding to small investor at high rates.

Building Up A Portfolio

At a level where the Sensex and Nifty Trades at an all time high, you would be wondering what I should do at this level?
Is this the end or even at current levels would it be a good buy or what should be my target?

A very plain answer to this would be it is still safe to buy. Now why do I say this?

Around a year back at the same time the Sensex traded at a level of 3000. Now it trades at a level of 7000.
However closely monitoring the PEs of the stocks as well as the sensex, would show that although the sensex and the various stocks have increased, the PE has been considerably low. At the level of 3000, the PE was aroung 16 level and now also the sensex PE is 15.3.
This clearly shows that the Sensex has not increased blindly and neither is it overvalued now. The sensex has increased with a good increment in Earnings and a high EPS has kept down the PE ratio.

Okay now, lets see what are some of the factors that can slow down the Economic Growth:
1> Monsoon Conditions
2> Oil Prices(I believe currently around 59$ barrel-plz check the exact figures)
3> Results and future prospects that the frontline counters show
4> Political Issues(which should not play a grand role)

Now what should I buy, will every stock increase?

Yes if the sensex increases tremendously, then I would say 80% of the counters will increase. It is important at this level that you "Choose the best and Ignore the Rest".
1> Entry should be made in a counter in 3 sets.
2> Do not put all your eggs in one basket
3> Do not overestimate? Read, hear analyse youself before you make a decision
4> Enter into stocks that are fundamentaly strong, or tend to be fundamentaly strong. (I am not saying do not buy penny stocks etc)
5> Do not be driven by a single day's chart, check past records and performace over the last few quarters and last few weeks.

Please remember the above and you should be able to do well off.