Its been long time when something on this thread was posted. I was actually waiting for 7500 to materialize as sensex came withing shouting distance. While that has not happened so far, market is not out of woods. But it does seem that any level from 7500 to 10000 is a good level for investment on a long term basis.
But before that few data specific to this thread.
FII trading activities in December picked up on positive side.The activity level was subdued, not gung-ho style. But overall remained on positive side.
Date---buy---sell--net in (Rs Crores)---net in $$ US($) million at month exchange rate
01-DEC-2008 --- 2157.60 --- 1738.20 ---
419.40 --- 104.00
02-DEC-2008 --- 1663.30 --- 1509.40 ---
153.90 --- 38.10
03-DEC-2008 --- 855.90 --- 1175.50 ---
(319.60) --- (79.20)
04-DEC-2008 --- 875.50 --- 1362.10 ---
(486.60) --- (120.60)
05-DEC-2008 --- 1779.50 --- 1331.20 ---
448.30 --- 111.10
08-DEC-2008 --- 1182.10 --- 1130.90 ---
51.20 --- 12.70
10-DEC-2008 --- 1724.50 --- 1264.20 ---
460.40 --- 114.10
11-DEC-2008 --- 2603.20 --- 1614.80 ---
988.40 ---245.00
12-DEC-2008 -- 2078.80 -- 1745.40 --
333.30 -- 82.60
Total for December - -- 14920.40 --12871.70 --
2048.70 507.80
Total for 2008 --705171.40 --757859.90 --
(52688.50) -- (13061.10)
Grand Total till December 12, 2008 -- 2849487.80 -- 2618708.10 --
230779.90 -- 53268.00
So except on third and Fourth Dec , rest of the time they are in green. Overall volume is subdued.Market is in sideways and going into Bollinger squeeze. Currently it is in the upper boundary of the Band. Overall volume showed slight upward movement.
This is something that intrigued me. Stock market showed extraordinary resilience over the Mumbai terror attack. The response shows that Indians do have faith in their economy. But most of all, foreigners (FIIs) have shown utmost confidence by investing in india during crisis hour. Global economy , especially USA and other Western Block countries are in recession.(I read one contrarian point which appeared more logical, but leave that aside).
Emerging Countries are scrambling to announce Stimulus packages, relief and lowering their growth forecast to 1-2% or in negative. Their critical data shows the impact economy is facing now.
The terror strike should have put India onto selling spree by FIIs. But that has not happened.
India Growth rate prediction is from 5% to 7.5% from various agencies. That is still better than negative forecast for some of the countries.
Indian economy is also showing impact of global recession, though not being so dependent on global trade, its impact appears to be moderate and on sectors that depend on exim of goods and services.
Stimulus package of India has not been so spectacular as that of USA, China or other countries. As for USA their package is inadequate to the crisis they are facing. China package seems more of verbal diarrhea rather than real stimulus. But the policy direction they have indicated shows the weakness of their economy. Stimulus is aimed at generating internal consumer demand. It is a well known fact that Chinese economy is overly dependent on Export and on USA. So anything goes wrong in USA China will also go under. Worried Chinese have scrambled to generate internal demand to offset any export targets.However most of the package they have announced is from their normal spending so it appears more of a confidence building exercise.
Coming to Indian stimulus, it does leave a lot to be done.Indian Govt have chosen to forgo certain percentage of revenue by reducing taxes. Announcing some investment policies and spending 20,000 crs. Already 60,000 cr farm waiver loan has kicked in and Banks would feel the strain of liquidity and forced to give loan at cheaper rates. Right now they are apprehensive and reluctant so are the borrowers in view of uncertain economic conditions. But this may not last long as surplus cash is a burden on Banks unless deployed .Sixth pay commission arrears have also come in handy ( I am mentioning it at the risk of being speculated upon as to the nature of job I have
). The amount of money is either going to be into Banks or spent in Market.Besides higher payouts at all levels means increased spending.
Inflation has shown declining trend.
The amount of money being pumped in Indian market before March 2008 is far more than Chinese's.
Elections are still an unknown quantity.But mini general elections have shown mixed trend and is not a pointer to Loksabha election.
Despite all this , many macro parameters have shown decline. That includes IIP which is lowest in 26 years.
Indirect and Direct taxed target would be missed though for first quarter it was fine.
Agriculture is stable and that is one good news for India.
But what the hack, sensex mostly reflects FII action rather than technical or fundamental aspect of Indian economy. So is the Indices being setup for trap. Is it ripe for breakout of the band on the downside? What if FIIs are not as angelic as they seem to be now?? What if they are devil in disguise??
So many doubts. How much downside do we expect? say sensex at 5000 or 3500.
Are these good level to invest?? As many say your money would only loose value in down trending market.Should one wait for more downside or for confirmed uptrend??
I personally have a very simple answer for all this.I think economy is resilient. I do not invest in indices but in stocks. I believe that many stocks are not only available at adequate prices but downright bargain prices. Timing the market or looking for bottom is a game people play at leisure.
There is one definitive pointer. Nomura , sometime back again claimed that 7500 is a good investment point and they would wait for it. Last time they said it and it was not achieved. This time also they would fail. But then still all levels up from 7500 is a good level for long term investor. By that , I mean not the trader turned investor, but real investor.
pk
