Wednesday, June 11, 2008

Start building your portfolio today.....

We are at crossroads today - whichever path our markets take us -- we will improve in mid term. Since may 5th there are only 6 white candles and rest all are black. Has our economy changed overnight? I rack my brains and go around in circles trying to place what is right and what is wrong with our economy. As always I will try to list out what is wrong and then see the brighter aspects.

What is wrong? - Our government is democratic with elections around the corner. I very rarely take democracy as a negative but in this particular case it has turned out to be so. The government's willingness to sacrifice growth to stem inflation, and it's interference in micro industry level pricing and profitability decisions have also dented preception of investors towards the country. Though this in itself is not bad -- left to industry alone -- they do not give a damn to anything at all other than profits. So though govt could have balanced it out better -- it could not do so due to the communist pressure and elections.

The next is the sixth pay commision payouts (though my dil mange much more), the loan waiver and the food, fertiliser and oil subsidies have added to the fiscal woes. Though the tax growth for last five years has been unprecedented -- the gains are being flirted away.

Like our govt -- we as Indians have very strong pluses and minuses. The minus is that we build euphoria rapidly in any direction we are pointed towards. When we were moving up -- people gave a damn about valuations, fly by the night operators and companies and today when we are going down we are doing so with as much conviction. There is just no sanity either way.

Last but not the least are the twin snakes -- rising oil and weak rupee. Ofcourse the result of this is that inflation has raised and is likely to remain a major concern.

On the brighter side -- The fact remains that our growth may be 6.5% in worst case and 7.5% on the better side -- this you must see in the backdrop of that the majority of the world will have a zero or negative growth rate.

The growth story remains. We as a nation are earning more -- saving more and spending more. Infact this may actually be a good time when the companies that grew at unprecedented rates in hapazard manner now get time to consolidate and put their houses in order.

The valuations are now 15 times 2009 projected earnings -- not bad considering that we were way way up and climbing.

The elections will come and go and the govt will have too -- and I beleive will take action to put this economy on track by taking tougher decisions.

India is a Trillion Dollar economy now and has placed itself firmy on the global map. We are not likely to disappear overnight.

We may have to live through this pain of 6 - 9 month period, but the future remains bright and sunny. This is a good time to build a portfolio as the ruturns will be phenomenal when the tidings change.

Back to Candles: Nothing has changed since yesterday -- we have not broken the jan 22nd lows and if we move convincingly above 4500 will see 4650 nifty levels. Break of 4400 will see another round of selloff.
On intra day basis we see voilation of lower bollinger band but on closing basis we still remain firmly on lower side. RSI and StochRSI is definately oversold. TRIX is down but Jaggu says TRIN is bullish. MACD divergence is increasing and looking down. Last two days the candles had shaven heads -- no conviction even to go above the market opening.
US cannot decide between DOW and Nasdaq -- which side of the line they have to close. Call it flat. Asia as confused as ever -- yo - yoing in green and red.

What do I expect? -- A white candle. Hey just by the way there is a small disclaimer at the foot of the page. You may like to see it.



Uma said...

A good roundup of the trends influencing the markets.

preet said...

Thanks Uma -- they should ideally affect -- but are we living in sane time.
We did have a white candle though and it gives me hope.

Rajandran said...

You All Linked to my blog

geniusjaggu said...

arre mamu,
chanda mama so gaye sooraj chachu jage
dekho pakdo yaaron,ghadi ke kaante bhage
ek kahani(bull market)khatam to dooji (bear mkt)shuru ho gayi mamu
subah ho gayi mamu, mamu, mamu
subah ho gayi mamu, mamu, re mamu