INSULATED INDIAN STOCK MARKET

It seems that the Indian Stock Market has pulled up well from the global sub prime crisis faster than other developed markets, which prompted some pundits to state, that our market is well insulated from other major markets (ref). It needs some courage to come out with the above as the markets in the present context are inter-webbed as never before. If we look at the indices for the last three months we will have to agree to this theory. Lets look at our own Sensex against developed market indices….

We have a certain and definite advantage over them. Luckily we have our own well defined market for our products.

But what about our services sector? Let’s pick up the IT industries and check for their movement with Sensex, it is a bleak story over there.

Question can be raised how can our own index can overrule this vital sector, is our index is also manipulated (induction of Unitech in Nifty) to the disadvantage of small investors, who always look up at the indices for market guidance?

Should we be assured of that we are not insulated from the slow down of North American market at least for our flagship industry of IT solution providers. There will be certain growth in the other sectors.

But still it is a "India shining" story retold.

IT STOCKS FOLLOW CYCLE

Tomorrow is an important day for market- Infosys result day. Market is going up and on its way up catching many experts on the wrong foot. The result will determine whether the market will go further up or may pause a bit with correction.
I am dependent on the result, for the IT stock HCL Technology, I have in my portfolio.
Good result will buoy it up. Market is already anticipating some good result, seeing the movement of IT stocks in last two sessions.

Stocks follow cycle. A company grows, matures and then declines. Best time to buy a stock is when it grows. At present it is India shining story, so most Indian stocks are growing. Rate of growth depends on management and business model. Some stocks have unique business model which is difficult and even impossible to copy. A good management can change the scenario of a business.

At present the growing Indian IT industry have some very good business model and robust management, which is evident from the growth of the companies. The top five Infosys, TCS, Wipro, Satyam and HCL Technology generally lead the way for the smaller companies.

I wonder if Rakesh Jhunjhunwala has some stake in IT industry. If not, why?

We are not at par with Chinese in manufacturing sector, it is their forte. But IT and ITES is our forte, if it goes wrong, there will be some grim picture to portray. Lets keep my finger crossed and ears open, and ready for action at the drop of a hat.

Am I as nervous as the market?