Small and retail investors should not be attracted at this low levels and should not try to get in. Its time to stay away from the market and let it recover. To earn some moolah all I can suggest is what is not suggested.
One can try to short sell in the starting phase. Stocks like Akruti City and DLF may see another cut of above 5-6 % in the market prices.
If the situtation is not tackled we may see a dip of another 400-500 points on the sensex and the nifty would well dip below the 2580 mark.
Due to worries in the west another sector which may suffer the blow is the IT sector.
One may short on TCS close to levels of 478 in the opening market and can expect to cover somewhere around 462 level.
Overall the suggestion is "get off the falling bricks, you might get hurt." - Achal Maloo
2 comments:
To be honest I expected something different then the oft-heard rhetoric on the street. Now you say about technical analysis (and to put it straight forward I am not a believer in technicals having been working for a great hedge fund and am seeing the thin line of difference between technical and sentiments). Now to put it straight-forward and straight-lift from the books of great Ben Graham/Warren, this is the time to actually enter the markets. Now i know space is limited to put forward the models (classical ones and not the report ones)but anyhow i believe the market is driven solely in bull market by liquidity coupled with good news flying on your face and bearish market is all about sentiment. We cant have a scenario where the real estate companies correct 95% from their peaks. This is not to say that they were fairly valued at peaks. But factoring in the correction of 95% and after adjusting the asset side of companies and factoring in with some margin of safety of 50% for universe of real estate companies I have been tracking and adjusting it to market realities (based on NAV calculation), we see that the prices on adjusted terms have corrected by nearly 65%. But the prices have not fallen. This is not to say that prices will not be lowered. Its in their better interest to lower the prices. But the demand of housing still is robust in some areas like Mumbai, Bangalore, Kolkata and Pune and hence the demand starts kicking in at a particular pricing. Remember for India housing and education is the main basket of any family. What we are seeing is the effect of global economy on the purchasing and consuming behaviour of our populace. So i think we are going to start to see some demand kicking in after the rate cuts and a marginal decrease in pricing. Now there are a few companies where the operating income is more than its market capitalization. So that calls for a caution and sit back and think of picking stocks right now and that so of real-estate companies. Sentimental analysis (You call it technical analysis) is nothing but one more book full of literature trying to make the already complex world of finance more complicated. From whatever I have learned, I know one thing, Real estate sector is going to be the back-bone of developing nations (some onus needs to be put on developers too who can built the low to medium cost of housing) and on the other hand it will be a leading indicator of impending collapse in the market in the future too.
One more thing, remember we are moving towards quantitative easing of credit (0% rates) which will fill the world with green bucks. Currently its being hoarded, but hoping that America learns from the mistake of Great Depression and the lost decade of Japan, i think it will unwind soon and this liquidity crunch will be more massive than what we saw in recent times. Thats my understanding on pure logic, analysis and experience.
Rishikumar Singh
(Batch of 2008)
Disclosure: I have started picking some real-estate stocks especially HDIL,Unitech, DLF and Marg constructions
Corringendum: the first word on the third line from the end of comment: its not crunch but growth. Apologies for the same
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