Hi All,
Now what is going to happen to the market is what is everybodys cocern.
Actually the long term trend for the market would definitely be bullish. However for a healthy growth in the capitals, the market should undergo a minor correction of a minimum 15% which would herald that there are people waiting to buy but are afraid to enter at current levels-a level where you can find the sensex way beyond your dreams of 8000 or you loose all hopes and dump back your money at a fixed deposit yielding a 6% etc.
But to be very honest with you it is safe that you buy rock solid shares as a major investment and a small amount of flickering shares.
Such rock solid shares would be one that have grown immensely in size and smaller in price namely NTPC, Tata Power, Reliance, GE Shipping etc.
These counters have strongly developed their base and fundamentals.
Some or say many counters have grown beyond there expected estimation, say Diamond Cables that I had suggested at Rs 11, now trading in the 45 region. The company has a net asset of 36 cr and made a profit of 0.47 cr. These counters stay nowhere if the Sensex Us up. That is why when the sensex is trading at a PE of 15.3, the majority of the penny counters are trading at 21 PE which is horrifying.
(Note that 21 PE for a counter is not worth buying but it may hold good for larger counters)
Such counters will perish if the sensex falls.
It is hence better to split up your investment among different investment plans as mutual funds etc etc or atleast counters of different shapes, sizes, prices and domain.
At these current levels what we should do is
1> Invest in rock solid stocks
2> Do not take over-positioning esp. if you feel that you are getting a counter at a cheap price.
3> Keep enough money in your cupboard that may suffice you in need
4> Go by the news because that is what drives the market. Technically you call it Pumping and Dumping. Pump the news after you are bought with a counter and dump after you get a good price.
However beware that the information you get is authentic and reliable and also stick to your stop loss and investment time span.
5> Do never think that you are the best
Thanks and Regards