Wednesday, March 5, 2008

Market outlook for the year

Finance Minister said that we would give preference to growth & market & he done the same but market was expecting more. Unexpectedly (for some people) F M given preference to Agriculture aiming Election.
But the real negative news is from global, even though sub prime in last stage its affect is like situation after war. No doubt that ordinary people its like Vanavasam.
Do not expect great return like past at least 1-year. If market corrected more (expecting same) coming months are not good for ordinary people. If you have penny stocks you will lose 70%-80% in coming months from current level, I mean already penny stock corrected 70% will face 70%-80% more. That means person who bought at high level in December peak will be forced get out of market.
Only wise traders will be able to make money in coming months. We will see selected mid caps moving towards all time high again even in range bound market.
Big Crash
Crashes are part of market; actually it creates more return quickly than bulls. Bull takes long time to get high levels, bear takes couple f days to reach lower levels.
1990’s Infosys came out 10-rupee face value. In 2007 the return given by this stock is 1 crore if you hold the same 20 years. Market faced lot of corrections in these past years. That’s why long term looks good for good shares or growing companies.
Market in 1-year view
USA is in recession; the sentiment after this will be more pain full than current time. Due to the same we are not expecting a great come back to all time high soon, unless very strong news not comes. The result is simple very selected shares will be able to reach new highs again. We are expecting most of these shares will find new levels with help from domestic institutions. People who want profit have to focus such shares. If you are not able to find these shares there is one more root left.
Trade good companies. Sell position at higher levels take position at lower level.
When market will reach 21000 again ?
We may see it in 1-2 year view. It is wise to forget all time high in market take a look at how much down side left, looking that less chance to go very low levels, so it is wise to take new long position when market dips support levels. People may think low levels like 6000, 10000 etc we are not expecting such levels but little bit higher levels from 10000 level if very strong negative news came. Such support level is very strong and it supports valuation. Such levels people will be forced to buy.
New Brokers & New comers will suffer
We saw heavy rise in brokerage branch in past time, these new brokerage will be closed as the trading will be less. Which will affect directly broking firms. There are lot of people are now entering market due expectation heavy return like past. They will suffer some loss but certainly not like people who bought around 21000 level.
A Little about Budget
There is no positive surprise in Budget; actually it was an Election based budget. Certainly FM had given space to other sectors but it is not enough to maintain growth. Short-term tax hiked to 15%. If strong positive news not came, No use, as the market will go down so revenue will be less, it’s a wrong decision.
To over come slow down proposal is selling nav ratna. Not going to possible this year.
Market was expecting good growth based on Budget but now earnings look down so sentimental selling also happening. One of main reason is valuation still not supporting looking future, because reality is less earning growth in future.
Certainly long term looks good once these problems settled but will take months. Long Term is good because our market is a domestic based market, as the consumption is expected to grow as the related things are growing long term looks good.
Election soon
According to budget we will see Election soon. According to news available fund settlement will be done before June means November looks election time.

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