The drama of free fall of Indian stock market staged in this week was not entirely unexpected. We could smell the storm. My last few blogs (here, here and here) actually dwelled on the impending danger. It does not require much intelligence to see the dark cloud in the horizon. (I felt like "Faberish" while typing out my last few blogs.) I was expected to book profit but there was hardly any profit to book. So I left my investments as such.
One can see few silver linings on the dark clouds too.
The market correction in the matured markets is justified; the earning of them is already saturated. But for Indian stock market, there is still a long way to go before to be saturated enough to crystallize out. The forward earning potential is still justified for the companies barring a few. The global credit situation if you analyze should not affect the Indian stock market. The initial jolt on our stock market by the global phenomena will be a temporary phase.
It is time to pick a few cherries in the bargain. We never know where the bottom is. The so called technical analyses are mostly fluke and few exceptions prove the rule. One should wait to exhaust his money to see the market pick up again. But in a bull market like Indian stock market, the price you pay for any stock will be surpassed after some time, if the fundamentals of the stock are good. One should see the fundamental first.
After every correction and especially after a tank like this the market generally reorganizes itself. There will be switch of sector, try to gauge the value sectors. May be banking, may be IT or may be anything which remained in the dark eclipse few weeks back. To me the last run of few sectors beyond calculations are not going to be there anymore.
The YoYo of the index will be there, one should not care to book profit if the chance presents itself. In this kind of market the swing traders fares best. Do not panic for the index movement, panic if your stock goes down despite with good fundamentals. Exit immediately from it, if necessary book loss.
The market probably may go down a few notches in coming days. If you have some investment there, languishing, concentrate on something else. The next cricket match is a good idea.
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