Weekly Outlook on Indian Stock Markets - 8th October - 12th October, 2007

Oops! This week post is late by two days. Well, all blame goes to the projects and their never ending deadlines :)

Anyways, we all have seen the tremendous run on Tuesday by the stock markets and the way bulls are faring, there is not stopping by for them. Markets are all set to touch 18500 this week, may be today itself and from thereon, one can see a minor correction coming in the markets.


Events Passed By
Before we discuss the outlook for the remaining three days, let’s evaluate some important events that impacted the stock markets in last 10 days.

Last week, markets had a good run, except on Friday when Political Instability looked really threatening. Comments by Sonia Gandhi at a rally intensified the tu-tu-main-main between both the parties and the separation looked imminent. This led to the correction on Monday. Tuesday didn’t opened good as well, but as soon as news regarding the next round of discussions came, the markets buzzed to new highs.


Reliance Power
The recent rally was full of Reliance Power. It never mattered whether it is ADAG group or Flagship Reliance companies, all shares that carry the Reliance tag scaled new highs. It shows the kind of reputation Reliance has among domestic and foreign investors.

If we look closely at the various bull rallies that occurred in last 3-4 years, Reliance pack of stocks always participated in them, but rarely were they seen as ones who are leading such rallies. But this time they have proved it wrong. According to a news clip in moneycontrol, reliance stocks contributed the most in the current rally of Sensex from 17000 to 18000.


What’s next?
“Despite all the glories and the triumphs, I have to fight the new battles & conquer new lands, tlll I breathe my last.” These words by a famous Roman Emperor say it all.

The million dollar question is whether market will halt here or will be touching 19000 mark in the near future? You ask this question to any investor on Tuesday evening and he will say “yes’, because he is overjoyed from the tremendous run.

But tide may turn the other way as soon as correction comes. Thus, the mantra for any investor is “caution”. One must not forget that the problems within the government are only delayed, but not resolved. The two major triggers could be CPIM Politburo meeting on 18th October and UPA Coordination meeting on 22nd October, where one can see allegations resurfacing again.

Also, the results won’t be as encouraging as anticipated. RBI monetary tightening policy has done the damage to the growth prospects of various companies, especially those which are interest rate-sensitive. Hence, one can see bouts of profit-booking at the regular intervals by the institutions.

The only soothing factors for Indian Stock Markets are the optimism and the euphoria that investors across the world has for Indian economy. This is what fuelling the growth despite all the concerns like Political Instability, currency appreciation, tighter monetary policies, etc.

So, my advice to every investor is to stay cautious and keep a tab on every news clipping that could impact the markets.

Indian Cynicism
Sometimes, I feel that Indian public is skeptical about everything. When Indian cricket team wins, we applaud them, shower them with advertisements, make them our idols. And as soon team loses one match or series, the same team is portrayed as useless bunch of men who care more about endorsements than playing well on the field. In other words, the time span between optimism and pessimism is very short.

The same hold true for Indian investors. The moment markets go up, everyone on Dalal Street talked about new levels, robust economy, high earnings, etc. Alternatively, when market goes down, everyone on Dalal Street becomes a critic of government policies, Hedge funds, RBI policies, etc.

I think the time has come when Indian investors need to grow mature. And the best way to do is to do extensive research on the scrip in which you are putting your hard-earned money. Visit the company’s website, read experts’ views, visit financial websites like www.moneycontrol.com, www.ndtvprofit.com, view the technical charts.

It is not so difficult, but only thing that lack is effort on our part. Be an aware investor and trust me, you will come out as a winner most of the times.

Wish you all a great week ahead!!