– The roller coaster ride of last few days would have made many intraday traders return home with no money left in the pocket. Till now the fall was one sided and almost everyday the move left the portfolios bleed. No body could do anything much about it since no one in his wildest imagination would have thought that Sensex can even test 10000! Had anyone spoken about Sensex of such levels few months back he would have surely been termed Senseless! No one spoke about it or could dare too.
– There’s severe liquidity crisis in the Indian Financial System right now. Investors who had committed money in FD’s FMP’s for periods of one year and more have started redeeming them suddenly. In such a scenario what happens is even if you hold a Safe asset it will fetch you less than market price on account of forced selling and this has resulted in even safe assets giving negative returns over the previous week.
– The situation is due to the repel effect from the west and can be contained by the Govt. and RBI, which we are already seeing. The next move mostly would be of a Interest rate cut and that would boost market.
– Sensex looks like will bottom out here. The valuations are at pe of just 10 – 11 and buying can easily come in if money is injected by the RBI. Market at worst case scenario looks like can touch 2840 on Nifty, though most probably it should consolidate here for few months till elections.
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