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Monday, January 21, 2008

Blood on the Street

5450 came on the Nifty and went. 5150 came and went. Even 5000 came and went. It was a day of high drama when stocks fell left, right and centre. Almost a knockout punch was levelled by the basket selling which came in today afternoon. According to information available, today's panic selling happened because of Margin calls. The exchanges called for margins and the brokers had to sell their leveraged positions forcibly to avoid having their terminals shut down.

In a sense, it is good that most of the poison has been spewn out of the system in one day ( I hope so). The faster this correction gets over, the faster we'll be back on our feet.


What a day! No cheers!

33 comments:

smjain said...

Why there is so much selling pressure being seen. We all know the fundamentals of indian economy are strong still why such a big correction.
Can it be wholly attributed to margin calls as you have stated.

Amit Basu said...

Dear Navin
If you Pl. recommend a good potential stock in this emerging market which can go from upper circuit to circuit.
Regards
Amit

Harb said...

"That which does not kill me strengthens me." Neitzsche

Hi Superstar, let us still cheer, for, who know this bloodbath too may leave us stronger - and perhaps even wiser to boot.

Harb

deepil2003 said...

hi all investors

really it was the bad morning and day for all ,i lost 158000rupees still we have to see more correction in coming days i want to say donot sell ur stock and hold it may be year or two we will get our price back in a single day this bull story changed and bearish trend started where the actual problem is ,in U.S.A THAT markets not corrected much but we corrected sharply and we keep on thinking that today it will stop at 19000,then at 18000 then at ----
donot sell dont sell dont sell.it is my message
thnks
deepak dindorkar

sandy said...

Yeah Friend Navin. I had Taken Blood Bath Today .Coz Jk Lakshmi i had taken 1000 shares@152rs.And It came down to rs 136.40.N Jk Lakshmi cement is Loocing 2 Good for future.But God Knows When I Will have Milk Bath?
Big correction ever Seen.

Superstar said...

Hi SMJain,
A correction in the Indian market was long overdue. But the speed and ferocity with which it has come has stunned everyone. Margin calls are definitely a big factor in today's fall. Plus there have been reports of heavy shorting of the Nifty by two funds belonging to George Soros in the last few days. The situation in the United States is pretty bad. All these reasons led to today's fall.

Hi Amit,
I think instead of thinking about upper circuits think about the safety of your money first in the present scenario. I would go for value stocks like JK Lakshmi Cement in the present murky scenario.

Hi Harb,
I am sure this bloodbath will make us stronger and wiser. It will teach the market a valuable lesson of not forgetting the value of fundamentals and putting a curb to one's greed.

Hi Deepak,
I agree. If you are confident that you are holding good value stocks. Then don't sell. This tough time will not last much longer.

Hi Sandy,
Yeah, it has been quite a blood bath today. Along with overvalued stocks like Essar Oil, the market unduly punished even undervalued stocks like JK Lakshmi Cement. But I think it is a great opportunity to accumulate stocks like JK Lakshmi Cement. Hold it with confidence. You are holding a good stock.

Cheers!

natureworx said...

2 weeks back I was sitting on a profit of 7 lakhs in my portifolio .

I was just confident that things are gonna be alright .. now at the end of the day today I am just at ground zero :) i.e. all profit wiped out.

Am hoping that things will be back with a roar. Will try and average some of the stocks ..

Navin, can u please give your mail id, I need your advice on my holdings.my mail id is sribop at yahoo dot com

sharefree said...

Hi Navin,
It is really beyond blood !!!! I started the day with a decision that if the market shows any sign of Blood bath, I would exit all my stocks ( primarily containing your recommendations like Aurobindo , Cybermate,Su-raj diamnods, Uichem); infact more of Aurobindo. I did the same @ 10.30 in the morning when sensex fell 400 points !!!

Boooked a loss of 1L over 7L investment.

Now wish to recover the loss friend n the safest way from this market ( the greed never stops :-))

Which are the best two picks to invest 2L; I chose to be slightly conservative !!!

Cheers

vipin said...

Hi All,

Today mostly global indices are down 2-8% . Even europe is down more than 5%. No fundamental no technicals work this time. If markets slide some more from here, then this is may be beginning of bare markets. 100% invested in markets 36 % in cybermate & 13% kohonoor broadband

Superstar said...

Hi Natureworx,
You are not alone. Everyone who is invested in the Indian Stock Market was in pain today. Let's hope that the bounce back will be equally sharp. You can post your holdings here also for advice.

Hi Sharefree,
My top two picks right now would be JK Lakshmi Cement and Godrej Industries. But now patience will be the key.

Hi Vipin,
When the Markets crash like they did today, nobody sees the value and fundamentals. People were selling out of fear. When irrationality takes over, even good value stocks get punished for no reason, along with the frothy momentum stocks. But you can be sure of one thing, that the good value stocks will recover sooner or later and in the long term you can't lose on them. The same cannot be said about the purely momentum stocks.

Cheers!

sharefree said...

Thanks a ton Navin for approving the posts to be displayed and scripting the reply too at this hour.. You are absolutely gr8 boss ..

I would go for JKL Cement and Godrej Industires.

What is your opinion on some value PSU banks like Vijaya Bank and Dena Bank which too have been hammered today.

Guess since US market is closed tonight for holiday, the tomorrow's US markets ( which wd be known in the evening) might give cue for near short term.

Cheers

smjain said...

Hi Superstar,
At the current levels whats your opinion on the following stocks
1.Noida Toll Bridge
2. Tata Sponge

To me both look undervalued. Are they a good buy
Regards
Shashank

smjain said...

Hi Superstar,
I just read this on moneycontrol

Futures Open Interest down by Rs 20,839 crore, Options Open Interest up Rs 680 crore

Does decrease in open interest in futures signify a reversal of trend and we may see an upward trend from here on
Pls share your view on this

madhu said...

Hi Navin,

JK Lakshmi decemeber results doesnt seem good. Margins are down, Interest cost is raising. On what basis you are recommend it, except that its PE is around 3.

Superstar said...

Hi Madhu,
As far as I am concerned, the December qtr results of JK Lakshmi Cement were good enough. It is a matter of your perception. As far as the rationale for investment in that company is concerned, apart from a mouth wateringly low PE, the company has a reasonable size, good management and gives out regular dividends. What more do you want from a stock???

Cheers!

madhu said...

Navin, i dont buy your idea of 3 being a mouth watering PE in cement sector. Gujarat Ambuja which is 25 times the size of JK Lakshmi is trading at a PE of 9. ACC trades at 9x, India Cements at 8x. There is a fear that government might again put a cap to cement prices in this budget. Cement cos operating out of tamilnadu have already reduced prices bcoz of pressure from state government.

ankur said...

Hi Superstar,

I want to know .. Should we try to low average rate for existing stoks or try to buy new ones (i mean that i dont hold .. )as the profit will be instant than lowering the average values for already held stoks. Which approach is better.

Also Plz let me know about your views on RPL, RNRL and GMR for lower averaging.
Thanks, I hope this phase will go soon...very painful ..

smjain said...

Hi Super*,
What do you feel how much time it will take for the market to correct..What do u say on today's fall. Is the worst over

Raghu said...

Hi Navin,

I bought Unichem at 204 and it has tanked to 140 Levels. I am ready to wait for 6-8 months . Pls advice whether the fundamentals are strong enough to recover my Capital in the timeframe mentioned above?

Reagrding the current market I have to say something.

In Mahabharatha when battle takes place Yudhishtira Asks one question to Krishna " Hey lord in these battle why the innocent people are being punished and killed though they have not done anything wrong?". Then Krishna Replies " Hey Yudhi,I know it .but it is the rule of nature . For the sanity to prevail,few innconet people have to sacrifice."

Thats what exactly is happening in the market.Along with Junk stocks even Quality stocks are getting hammered.In the end its Pandav's who have won.So sanity will prevail.quality stocks will winback if one has got "little" or much more than "little patience".In these moments what makes one down is not the "loss" but "fear of loss".

Ambrish said...

superstar, i invested in Aurobindo at 520, thereafter avg till 490. But now i am exhausted and cannot invest further as no funds :(
so what is the prospect of this? Currently its almost at half the price. Rgds Ambrish

Raghu said...

Hi Navin,
Good day.
Thanks a lot for all your timely suggestions in this difficult period.
Have a nice time.
cheers,
R-Mel

sandy said...

Hii Superstar How are u? Friend. Really Upset With this Bloodbath All profit gone.Godknows When we will Have Beer Bath? N onething more to Ask Which Script u prefer in this Market That makes Money Double triple In Long Term? Just tell me Really m upset.I can wait 1 Year from Now.. Just Search Good Script I can invest all my money into one Script.
cheers
Sandy

Guru bhai said...

hello boss

nice to see you to given good back in blood bath.

sirji can you give best pick from your side after this black monday.

Regards

Tejas

Harb said...

Hi Navin,

Something to cheer about!

The news came just now that Fed has slashed interest rates by 75 basis points, a move which is sure to lift US markets and as a consequence our own. It will not be a surprise if our market opens up by 3-400 points tomorrow morning!

US future markets are already in the green and US normal market is likely to follow suit. So have western markets in general already.

Cheers! Harb

Superstar said...

Hi Harb and friends,
It is indeed GOOD NEWS THAT THE US FED HAS CUT THE RATE BY 75 BPS. Let's hope that we'll see a smart recovery in our markets from tomorrow.
Those asking for my BEST PICK in the current scenario. IT IS UNDOUBTEDLY JK LAKSHMI CEMENT LTD. WHICH IS AVAILABLE AT A DIRT CHEAP PE OF 2.4!! Just go out and buy it tomorrow with a long term view.

Cheers!

Sumit said...

Hi guys,

Pls stay away from ICICI Direct.com
This is the worse online trading system one can use.

I could not conduct a single trade yesterday especially when the prices were dirt cheap. I was not able to get the home page, it would take ages to log in and kept crashing, it would take 6-7 min for the buy page to appear and then it would time out. I felt ridiculous yesterday cause I was ready with the money to invest and this is inspite of me having a single dedicated internet connection of 6Mbps.

I use etrade in the US to trade (a market where millions trade online) and it works like hot knife going through butter.

Pls do not bank on ICICIDirect.com for your trades. I have opened a Reliance money account 2 weeks back but yet to receive the account details. I have not heard that great a stuff about them as well.

If anyone can suggest a reliable online system pls do.

Hi Navin,
I sold my entire portfolio (apart from cyber & Nandan which were stuck in circuit) on Monday morning in the first 20 min of trade. Luckily I got out at the right time. I don't know what came to my mind but when I saw my profit go down by another 8 % on monday morning I decided to sell all and it turned out to be a lucky decision which could have gone the other way as well.

Thanx to the sale I am sitting on good cash reserves to invest. Pls give me one word (buy or not) on the following stocks
Blue Star
Tata Motors
Reliance Ind
Jain Irrigation
Reliance Communications

Aurobindo Pharma
Unichem Labs
Bank of Baroda
Reliance Capital

IDFC
JK Lakhsmi Cement
Godrej Ind
Rohit Ferro
Punj Lloyd
Jaiprakash Hydro
Jasyaswal Neco
Mundra Ports
Nissan Copper
Alps Ind

Ansal Properties
Rolta India
Compact Disc
Hitachi Home & Life
Bartronics
Praj Ind

I know you said not more than 2 stocks, but I just want a go ahead from you. Pls do not do any detailed researchh as i am sure these stocks have good fundamentals and revenue streams, just want to know whether to go ahead or not at the current price or to wait.

Even in these times of blood bath, I still believe in recommendations and I am sure all the stocks u have mentioned will do good. I was able to pick up Reliance comm at Rs. 495 and Aurobindo at Rs.245.

I would truly appreciate your response on my query.

SC

Superstar said...

Hi Sumit,
You did well by doing some bottom fishing today. Such rates may not be available for a long time now. Your list is too long to comment individually, but most of them are good buys. Just keep in mind before buying to buy with a long term view and only those stocks which are trading at a low PE. If the stock you choose has a combination of high growth and low pe ratio, you cannot lose in the long term. This advice is for everybody else also. Evaluate the stocks you want to buy on these two parameters. Whether future growth is assured and whether they are available at a low PE ratio.

Cheers!

smjain said...

Hi Naveen,
ANy target for Jaipee Associates from this level...
Cybermate hit a LC today what do you say

Vidya said...

Hi im vidya i have 3000 jayaswalneco@82 give some great tips hold or sell

Superstar said...

Hi Vidya,
You purchased Jayaswal Neco at a price when I had given a Profit Booking call on it, since my first target was met. What were you thinking buying it at levels of 82? On whose advice did you buy at that level? If you go through the Jayaswal Neco topic in this site, you'll find that I had advised a buy on it around 30 levels and gave a profit booking call at 80-82 levels.

Cheers!

Superstar said...

Vidya,
Now hold it for 12-15 months.

Cheers!

shekhar. said...

hi naveen,
even i know little bit of fundamental
analysis,you only sugest stocks on its low pe?what about its other ratios like opm,bv,roce,and ev/ebdit
ratios,cash flows,
as per my view goes that these parameters are also important when selecting a stock.am i right or wrong
please put some light on it.

Superstar said...

Hi Shekhar,
As I replied to you on the other board, all these factors are also important. I would suggest you look at PEG along with OPM, cash flows,bv and quality of management instead of just PE while making investments.