"Shopping Time" ...22nd Jan ,2008

"Shopping Time" ...22nd Jan ,2008

Jan 21st always a special day in my life not because of Black Monday but for the reason of my Birth day . I consider JAN 21st 2008 is a significant day in the history of Bull run which started couple of years back . If we analyse the entire trading day it teaches number of lessons to the investors and trades for the future investment course of action. Equity guru Mark Faber rightly stated when you are investing in equities better be prepared for 30 % down fall risk. that statement got manifested in Last two trading sessions . If we retrospect from August 2007 sensex was hovering at 14000 levels , just a small statement from Mr Ben Bernake , US Federal Reserve chairman's Fed rate cut opened the flood gates of Foreign fund flows to India and emerging economies , within span of two months we were at 20,000.Large cap, Mid caps, small cap and penny cap hitted their lifetime highs .. From last two months trading days and all there is retail mania was prevailing in the market . Retail investors and short term punters were chasing small and mid cap companies . Companies without balance sheet like RPL and companies without fundamentals, earning track like RNRL produced handsome returns to the investors during the last three months. But the darlings of last three months scrips have turned as dare devils to the traders and short term punters within a single day
Jan 21st 2008 recorded a highest number of points fall in the history of sensex , 8% shave off of market cap irrespective of sectors and industries . with market breadth 1:50 advance and decline ratio and finally the day changed the price to earning multiple ratio nearly 2 to 3 times of the sensex companies. All the technical support levels and moving averages were broken. What led the market to fall like in this kind of ferocity is important , for a simple reason is markets were run up from 14000 to 20700 levels with in a span of three months , along with Indian markets , the entire spectrum of equity universe was in the mode of uptrend in the last couple of months . So any destruction at any of these equity markets clearly impacted Indian market as well . Even though the the third quarter results are good but not helped the markets to sustain at the high levels. But time and again Indian markets are proven resilient and resurgent markets. There is no change in the macro economic factors of the economy and the consumption story of India is intact . Earning growth of the corporates are in the right pace . Till today we can't figure out any dent to the fundamentals.
These kind of rational falls gives the opportunities to the fresh retail investors and FII waiting with thirst to invest in Indian markets from a long while .Clearly todays move shows the strength of the Indian markets . Going ahead the liquidity flows from the domestic institutions mutual funds especially insurance companies and retail flows will help the markets to sustain . In 2006 May ,trading mood was like today but people invested at the May 2006 bottoms reaped tremondus harvest. Invest when others are in fear , sell when others in gungho this principle will assist us in this kind of market times.
I suggest the investors don't get carried away by this kind of moves as the market reaches new highs and the layers of participants increases in the market these kind of swings and dips will be a regular course of unprecedented bull run . Stay invested in companies which are fundamentally strong , fundamentals reflects in strong earning track record and clear visibility of future earnings. Equity market is place where every body knows the price but not the value .Let us hope the shopping time has come to buy quality companies at fair prices with good value.