DIWALI STOCK CRACKER

DIWALI SPECIAL ....! 5th NOVEMBER 2010
To all my readers at Wealth Mills , I wish you all a prosperous Diwali , festival of lights . I observe a clear difference for this Diwali as I pass through the roads as this Diwali is brighter than the previous ones. What makes this Diwali So special ! Is the positive confidence is back to billion spenders and investors in India . With the Mahurat trading markets are just at a kissing distance to the new highs and I can sense if the same rally continues for some time Investors can look their name on Forbes without working hard any more !. What the major change happened in the global arena if you analyse is past 2 years is except the confidence “ Nothing has Changed” Indian Markets were at All time high in Jan 10th 2008 at 21208 came down to rock bottom of 7697 in Oct 27th 2008 and Now stands at 21000 levels . If you bought a Index fund in Jan 2008 means after all the carnage and bull run with gush of liquidity, Congratulations !! you would have got back your capital or any thing + ve or -ve 5% , because of trail and error.

Today onwards the so called Fund Managers and Equity Analysts starts projecting their Lucky & favorite numbers on idiot boxes!, I mean Televisions sets! about New highs of the market with the sweet India's Domestic growth stories which entices the investor fraternity . In this saga of last 2 years we need to observe Indian stock nature which was so extreme, It just discounted first 3 years performance of UPA led government victory in first 3 minutes of trade on 18th May 2009 . Every one boast about the resilience of Indian Economy shown during the period of global credit crises , the Great advantage for Indian Economy was General Election in 2009 considered to be one of the biggest event across the globe & especially in India where all the unaccounted money flown into the economy without any restrictions. Just for simple math for 545 parliamentary constituencies for each Loksabha seat the average expenditure by the contesting candidates was minimum 25 crores which translates to more than 2 billion US Dollars which flown into the economy without any record . sixth pay commission's fat pay revision helped the Indian economy as a major stimulus besides to the govt actual stimulus package has helped the economy at greater extent .
Without mentioning the Top Financial regulators my Article is incomplete the Chieftains of RBI, SEBI & IRDA , Every one tried their level best to show their sincerity in their task they are assigned .First and foremost the chieftain of RBI the well educated Mr RAO he is an expert in 2 things either tighten or loose interest rates . He did't see any thing !! If food inflation is high increase rates or its low decrease interest rates . He should know a simple law people won't eat 7 times a day since interest rates are Low or High .But I appreciate him for keeping interest rates at high when compared with global markets at least investor will get something back on their savings in fixed deposits. The second one is our SEBI chief C.B.Bhave , He is advanced and visionary !,He want to change the whole financial market systems over night . A Few significant changes he enforced were ban on entry loads for MF and ban on all unit linked life insurance products. Because of ban on entry load on Mutual Fund products from 1st August 2009 nobody is there to advise & service for M.F . Banks & Financial institutions stopped prescribing MF to their investors as they don't derive any revenue by advising the same . To overcome this problem fund houses and financial advisors resurrected sick product in India i.e Portfolio Management services to the Investors as they can charge with various fees left , right and center with Entry load & brokerage while churning the fund. I observed financial advisors advise only PMS and financial steroids like structured products with different combination of Equity , Debt & derivatives for their survival and also key cause for global financial crises . With the Inspiration of RBI & SEBI chiefs IRDA Chairman J Harinarayna gone one step ahead !, with number of sleepless nights completely revamped the unit linked policies and with this effect financial advisors started advising traditional endowment products where liquidity for Investors is less and the agents can earn double of their commission when compared to ULIP . Ultimately every one the regulators and financial advisors making their efforts at full throat to make investors more confused to take financial decisions about savings & Investments .
My sincere advise to all the investors in India is please do your homework before you take any single financial decision . As per stock markets are concern we are at 21000 levels of market, At price to earning ratio of at 18 times of forward earnings which is high value territory of course financial analysts mislead this number as fairly valued . As GDP to market capitalisation we are at more than 1 time which indicates high value for India .But because of unprecedented gush of liquidity markets might rally forward in the days to come . 10 to 15 % correction is healthy for market at this level . This is the time for retail investors to become vigilant and cautious before coming to market and please if you want to invest now don't waste your gun powder in a single shot. Take route of SIP or MIP and start Investing . Remember stock market investing is not T20 cricket or one day nor a test market cricket ITS A MARATHON stay invested wait for the opportunity don't rush. Investment decision is not a Diwali cracker its a nuclear bomb which change the Financial Fortunes of your life.