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.