IS INDIAN STOCK MARKET BEING MANIPULATED?

“The present slide of Indian stock market is due to global cues”, the market pundits are saying. By the very word “global cues” they are hinting to the “recession” of North American economy. All the major markets, including the robust emerging markets are showing weakness, and many are even hinting that the bears are taking over from the bulls.

To give a loose definition of recession: it is a contraction of economic activities spreading more than just a few months and becomes evident within a few months from the onset of it. The complex web of financial world which connects the world’s market makes it difficult to predict how the US recession will affect a particular market. So, generally many theories fly around. It is easier to press the panic button by one and for all. We have seen that rumors gain more ground than in normal condition.

Now we will come to know the “theory of decoupling of economies” will prove its mantle, as is being professed by many economists. But it seems the pillars of market are developing cracks, and may be it will be too late to welcome the onset of so called “decoupling of economies”.

Not going to financial theories and jargons, we should remember that the small investors are bleeding and the loss is far greater for small investors as they are not equipped to deal with falling market.

I always had some hunch of suspecting about the manipulation of our market by some unscrupulous operators. This particular view is probably shared by most of the small investors. We all will welcome the Regulator SEBI to play their positive role in this kind of manipulation if there is any.

Recently I have come across an interesting blog, which I think those who have the lingering doubts on market manipulation should go through it. LINK.

Can we do anything more than keeping our finger crossed anticipating the rebound of our market after the Budget session of Parliament?

DO NOT BUY: WAIT FOR SOME MORE TIME

The present fall of Indian stock market is so violent and vicious it forced me out of my slumber of so called bloggers block. The sudden and completely unanticipated tanking of the market is the result of many factors and the factors were cumulative. That is the reason of this violent fall trailing with some bloody aftermath after every fall.

I was shivering in front of my computer when I saw the freefall of the market as if there is no bottom, interestingly similar feelings was there when the market was going up at a frenetic pace (my earlier blog). Such wild movement of the market is definitely not good for the small investors.

But market reign supreme. The market is very vindictive in the hands of market operators. Probably it calls for proactive Regulators which do not yield to the stage managed hulla-bol of unscrupulous element.

Probably, after a long time, the market is reinventing value, and discarding momentum. In that case what will be our next logical step to rise like Phoenix from the ashes of our portfolios?
Should we cherry-pick some good mid cap stocks, large cap stocks, dividend paying stock and what not at some attractive price as some experts are dishing out their advice.
(Sometime I can not stand some experts who pose as Mr. Know-all and have some preconceived ideas which in most cases turn out to be wrong, but never accepted it. aka. ONGC, RNRL, L&T haters )

For me sit tight and watch is the best policy for the time being and buy my stock only after the market turns around from the bottom of this abyss.

I am very much sure we have a bull market ahead of us and may be these developments are for the best interest of us.

HIGH P-NOTE EXPOSURE STOCKS

The recent clamp-down on P-note by Market Regulator has mixed reactions from different quarters. The stock market is going topsy-turvey on this issue for last few sessions. We all are confused along with the Indian Stock Market how to deal with this particular issue at hand. But anyway kudos to Regulators.

Probably we will be well off if we know the stocks where P-note exposure is high, I have come across such a list from a well known Blog (Investment Guru), I could not resist to note the stocks which he has shown as having high exposure to P-note.

India Bulls Financial Services
ICICI Bank
HDFC
Bharti Airtel
Reliance Capital
Reliance Energy
Financial Technologies
SAIL
IVRCL Infra
Gateway Distripark
Aptech
BHEL

To quote the statement "this is not an exhaustive list". Link:here

Now what to do in such a scenerio? To me for investors there is absolutely no sense to press the panic button. The P-note have eighteen months time to wind up, but only concern is for the so called market operators, they are already and will be out there in the market to skin unsuspecting small investors. The following three steps will help the small investors in the present scenerio

1. Do not indulge in short term trading. No fresh long term buy.
2. Do not empty up your stock portfolio, specially those family silvers.
3. Bottom fishing is ambiguous term, one can not time the market, we should keep in mind.

We small investors are better off if you compare with those fig fishes. We can hold back our positions till sunny days ahead.

BIG OPERATORS VIS-À-VIS SMALL INVESTORS

Though the term “Operator” does not seem right for all high net worth investors or institutional investors, the term somehow stuck to them. They have the capacity to manipulate the market. They can artificially jack a stock up or dump it down the drain and that is for anybody’s guess. If they choose to operate in cartel they can manipulate the whole market. We have the terms Bear Cartel and Bull Operator in capital markets.

The recent additions to the term “Operator” are Foreign Institutional Investors (FIIs) and Hedge Funds. When they come; they come in swarms and when they go, go out in swarms. These dangerous/vicious Operators can even ruin the economy of a country if the regulators are not careful enough. The established cartels and regular Operator treat them in awe. They have enormous money power and very well designed market operation employing best brains, which can upset any apple cart. There are lots of stories floating around in market, how so and so were really upset and had to gulp down some bitter pills against their very will. At times; it seems to be some kind of poetic justice meted out for some unjust operations affecting the Really Small and Helpless Investors (RSHI) that was carried out some years/months/days earlier.

The small investors are helpless spectators of the drama. The intelligent ones utilize the tide and reap the benefits. But most jumps into the arena a bit late and sadly have to converts their trade into investment with some real long horizon (*). My policy is to be the spectator and not try to be intelligent. I will invest only after studying the script and invest in them if the script can satisfy my basic requirements of sound fundamentals and low P/E and good earnings. (Change of strategy!!)

Cummins India is coming back to news as some Broker house has put it into buy; probably now it is making good chart patterns. I still have the opinion that the script has potential to go further up and may touch new highs, though I had come out of it as I did not had enough space for profit booking. It is still buy in correction.(*)

The TCS result has put some interest back into IT space. The IT picture seems to be gloomy in near term, but Indian IT Companies have the dominance and enough fire power to pull their act together again. I had a long night on Sunday, and decided to stay put in HCL Technology at least till result. My gut feeling says it will break the resistance of INR 350 in near term, I repeat that is gut feeling only.

I have two stocks in mind which may offer some short/medium term trading opportunity.

Centurion Bank of Punjab: Sometime unreasonable P/E defies justification if good stories are anticipated.

JBF Industries: May be another story of pulling the act together.

Both stories are touch and go. Careful study will be required.