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Friday, January 18, 2008

CURRENT MARKET OUTLOOK

As you all know that the global stock markets are very weak right now and there are recessionary fears in the United States. The stock markets the world over are falling like nine pins. Only the Indian and Chinese Stock markets have so far withstood the storm relatively well. Simply because of the high economic growth these two countries enjoy. But every year, there are at least two occasions when the markets correct severely across the board. I had predicted about a correction in the overall market around the end of January on my website in my New Year Blog but it has happened two weeks earlier than I expected.

This correction is giving us and opportunity to cherry pick good value stocks at cheap prices. You can also use this correction to exit pure momentum stocks and get into high quality stocks which you always wanted to own but could not afford to because of their high prices. This is a good time to churn your portfolio and move from low quality stocks to high quality stocks. So keep an eye on the new picks I've given here and pick them up on dips.

There are two possible scenarios in the overall market:

A) That we are almost near the end of tunnel and markets should start recovering from next week itself.

B) This is the start of a bigger correction in the overall markets and things may get worse before they get better. Remember what happened in May 2006 and March 2007. Every year this happens that the markets have to go through one or two deep corrections. This may be the first big correction this year. The levels to be watched on the Nifty are 5850, if we close below that then next support is at 5700, if we breach that also then there is a possibility of the Nifty going to even 5500 or 5450.

I am hoping that scenario A plays out and not scenario B. Long term, India is still in a bull market and will make higher tops on the indices. It is just that we should be prepared to face a few road blocks on the way.

Cheers!

19 comments:

sandy said...

Very cleanly explained, This should go out to all the new investors, I have been in this for little over a year now, I usually see this time as the time to pick quality stuff.

Lets not Panic and look forward to a nice progress hopefully from next week.

sharefree said...

Hi Superstar,
Thats why you are Superstar as the name suggests ... Excellent analysis...

As written by me earlier, I am pretty much getting skeptical about Aurobindo; as it went to 415 levels today. Would you have news which is coming adverse in their results going to be announced on Jan 30.

Cheers

Manu Tripathi said...

Never mind. It happens. market has fallen very sharply, I wish it to happen even more. let us see deep can it go. then will come the dawn.
manu

Prativa Satpathy said...

Dear Superstar,
Since one year back I had bought Tata Tea @ 815/-. To-day it has come down to 777/-. Should I hold or switch over to other stock? Kindly give your views.

vipin said...

hi superstar,

market is dipping down and it look like to touch 5500. so is it prudent for some bottom fishing. i would like your views on G E Shipping, Shipping Corp. Of India & if possible on Garware offshore

Sunil said...

Hi Superstar, I have been reading your blog and your comments on money control for quite some time. I had bought DCM Shriram Consolidated, You used to recommend that quite prolifically on the forums, now I notice that you don't, has anything changed specifically to exit that. I hold it @ 70

prashanth said...

I BOUGHT 100 SHARES OF AUROBINDO PHARMA @ 500 BASED ON YOUR RECO, I AM LOSING LOT OF MONEY ON THESE SHARES, I DONT HAVE ENOUGH MONEY TO AVERAGE MY PRICE. DO YOU SEE THE STOCK GOING STILL FURTHER DOWN. PLEASE SUGGEST SHALL I EXIST THIS COUNTER BEFORE IT MAKES BE BANKRUPT.

Ashish said...

Hi Superstar

Please find below some of the stocks that have potential of being mulibagger i nfuture
Lokesh Industries
BOC India
Navabharat Ventures
Bhagyanagar India Ltd.

Appreciate your views on the same .

Thanks
Ashish

Niranjan Kumar said...

Should I withdraw all the money from stock market?

I have invested all of my money in stock market during last one year. At one time the profit was around 1.8lakhs, now it became 90K. Should I withdraw now so to get at least 90K profit now?

Invested in Reliance Industries, Balmer Lawrie, MIC, Nitin Fire, Gateway Disktripats, McNally Bharat, Bharti Airtel and IDEA.

Appreciate your suggestion.

Thanks.
Niranjan

amol said...

Dear Superstar I am a new invester
I bought following shares as per friends recomendations, but now I feel I got traped and loseing my money please recomand me.
Alpa( 500) at 50
cybermate 500 at 19
lokesh machine 500 at 165
paramonut communication 500 at 51
reliance infra 3 at 2900
please gide

MANOJ said...

Dear Superstar,

Do u think that weakness in dollar to rupees would severely affect cybermate.

Please guide.

Regards,
MANOJ

PAM said...

Hello Superstar,

I appreciate your help on stock market. YOur currrent Market analysis were excellent. I am following your site from Beginning of this year. Asper observation everything you have told is correct. I have confidence on you. I hope Market will recover back. I feel that I have to hold Unichemicals and cybermate info for another one quarter results.
Thanks

prashanth said...

Hi,

I have applied for Reliance Power IPO through part payment option. As the retail has been oversubscribed nearly 15 times, will I be able to sell my shares on the day of listing or do I need to wait for some more time please clarify

Naveed Pasha said...

Hi Superstar,

Thanks a lot for your reco's. I am really surprised to see as to how you always get the things absolutely correct.

Personally I have the following stocks in my portfolio, it would be great if you can let me know your take on them. I am thinking of holding them for a period of 6 months.

KS Oils @ 65 - 200 shares
PENTAMEDIA GRAPICS @ 6.75 - 1000 shares
Nandan Exim @3.85 - 2000 shares

I have bought cybermate and JKLaxmi cement based on your recos.

PS: It was a wonderful victory for INDIA over the Australians. I am very happy for that and wanted to share across.

Best Regards,
Naveed Pasha

Superstar said...

Hi Sharefree,
Aurobindo is close to 400 levels and I think it has reached its bottom. I am not aware of any adverse news to come in its qtrly results. It is a buy for long term investors. Even Sharekhan has come out with a price target of 900-1000 for it.

Hi Prativa,
Tata Tea is a definite Hold at current levels. It will bounce back. It is a good stock to have in your portfolio.

Cheers!

Superstar said...

Hi Vipin,
It is definitely a good idea to start doing bottom fishing in select good value stocks. GEShipping is a hold and buy on dips. Not too sure about SCI and Garware Off at this level. Go for GEShipping.

Hi Sunil,
I had recommended a buy on DCM Shriram Cons around 70 levels and it recently went close to 100 I think. Yesterday again it was down along with other sugar stocks. I think you should have booked profits in the recent rally. I would book profits the next time it gets close to 100 levels as it faces resistence there. It will become technically strong only if it starts trading above 114 for a few days.

Cheers!

Superstar said...

Hi Prashanth,
You should not invest money in the stock markets if you do not have the holding power. Aurobindo is a Buy for Long Term investors. As told earlier, in the long term you will not only see it going back to your cost price, but making good profits also. Read my reply to Sharefree also.

Regarding Reliance Power IPO, I don't think you will be able to sell your REL POWER shares on listing day IF you receive them as partly paid up. You will have to wait till full payment is made. ONLY IF you receive your shares as FULLY PAID UP, you will be able to sell on listing day.

Hi Ashish,
Out of all the shares mentioned by you, I like Nava Bharat only.

Cheers!

Superstar said...

Hi Niranjan,
I wouldn't advise something as drastic as cashing out completely from the markets. All your owned stocks are good companies. There may be some more downside due to the prevailing market conditions but in the long run, I reckon your stocks should do well.

Hi Amol,
Most of your shares are worth holding at current levels. I am uncertain only about Reliance Infra. While in the long term you may see some profits in it over and above your cost price, in the short term it may re-test its recent lows of around 1800 levels. Tough to call.

Cheers!

Superstar said...

Hi Manoj,
The weakness in the dollar is old news. It would not affect Cybermate Info any more than the other IT stocks.

Hi Pam,
Thank you so much for appreciating. I guess you are right. While Unichem Labs is an established company, Cybermate Info is a turnaround story.

Hi Naveed,
Thanks for appreciating. Yeah, India's victory over Australia on their home turf is exciting.
I had advised and exit from Nandan around the highs of 9 plus, but now since it has fallen a lot and since your entry is low you can sell it on a rally. Not a fan of Pentamedia either, you are advised to get rid of it even at cmp. Out of the three KS Oils is the best and you can continue to hold that.
Cybermate also you can hold with a Stop Loss of 14.
Use your surplus cash to buy more of JK Lakshmi Cement.

Cheers!