Markets update

For few months we have experienced the markets trending. The upward movement in the key indices in Indian markets has made a significant wealth for the investors. However the things changed in the last fifteen days. The markets have lost significantly. The sensex lost around 1000 points.

This has prompted many of our readers start asking what to buy. We are of the opinion the market is expected to trade for next few days in a large range. We have started working on our bets. We are considering buying at declines. However in no circumstances we will commit our entire bet at this level. At the most 50% of the total money can be committed to the stock market. Also this can be done only if the investor has a minimum two year timeframe.

We repeat we are having a cautious stand on the market in the short term. This is primarily not only because of ‘sub prime’ issues but also due to the ‘Left’ in the Central Government. We do not care about the nuke deal as such. However any revision or going back on this deal will for sure send ‘adverse’ signal to the overseas investors who are driving our markets in either direction.

Now which stocks to buy? We have already given some of our preferred choices earlier. We will come back to you at the right time. The same will for sure take some time.

A word of caution. There are some brokers who are talking buying Raymond. The investment argument is that the company owns a solid brand and is available at lucrative valuations and much more. However we advise the investor to pay heed to some facts.

The company is known for its investor rivalry. The registered office is located at Zadgaon on Mumbai-Goa highway. The place is deserted village equidistance from both Mumbai and Panjim- both major cities. As per the Company Act, 1956 the annual general meeting is to be conducted at the place where the company’s registered office is. The company does not have any operation at Zadgaon. The registered office is deliberately kept at Zadgaon to avoid investor turnout.

If you think you still want to invest in the company, you may do so. There are many stocks that enjoy low price earning multiple and many a times it is because the promoters’ integrity is a concern. Promoter is the biggest factor while making an investment. Hence keeping the promoter concern on the back seat is a real risk and must be taken with most caution.

As always, we do think that a stock specific approach will reward the investors in the long term. Markets prefer certainty over uncertain issues. Let’s wait for that time to approach us. In the meanwhile keep tracking the stocks and keep picking them up as we see value.

One more last but the most important thing..

Happy Navaroj… … … Happy new year !