Tuesday, 18 September 2012

Percepts of a Market Novice

Markets are funny. And I say markets are sadistic too. My mere stint in them for three months has taught me a lot. It has the ability to engulf you, woo you and then discard you like the UPA did to didi. (Haha that was seriously funny though). (In this case I don’t care about the knee jerk reaction but admire the confident stand by the party. Kudos. I say India has finally landed.) .
What I understand is that markets purely work on the mechanism of supply and demand. So the price at what you buy or sell plays a crucial role. But who gets trapped in this mechanism? Yes you and I, who think markets, are soaring, and before you know, it’s all gone. Well let’s face it; we have to be extra cautious backed by consistent expert advice, before we plunge into it.
When I say this I recollect the TV advertisements which feature in stunts. They come with a disclaimer ** Do not try this at home / without an expert .It is dangerous **. I can perfectly correlate the market to the same. I agree when financial advisors claim that equity is the best asset class to get superlative returns as it beats inflation and is devoid of tax and so on. However there lie the clauses attached.
Let me just elaborate with hind-sight. The market crashed in 2008, followed by a massive bull run in 2009. The horizontal stint continued in 2010. 2011, it fell considerably. Until now 2012 seemed dull, if not for the sudden Bull Run. The factors pertinently being the ECB Liquidity move, QE3 and now the UPA reforms. However, when we look back, how many of us would have known the exact points of deflection. Markets are evidently too quick to factor in any news. So the moment you blink, market has reacted and run way ahead. Ok now you wake up, and say I wish to join this marathon run too. You start to accumulate and by the time you realize, you shall be accompanied by bears.
Another prominent dilemma I see that many us would have faced. Buy, when the IPO is launched on a high, and then wait till we reach our graves for the prices to reach those levels again.(Somehow reminds me of Facebook). My observation tells me, that it’s psychological to plunge into the market when it’s at the peak. Everyone is hesitant in the bear zone. But common sense states buy low, sell high. Well I’m guessing we shall all learn that after we get into the ring and get crushed. (Including me at this stage).
Let me further elaborate more on my personal observations;-
-    -When you do invest (especially with bottom- Up) Approach look into the fundamentals backed by the technical’s of the stock .If you don’t understand, ask your expert to give you a review of both .It certainly works best.
-    -Understand sectors. Not all work in your bullish run. The Pharma and FMCG sectors seem to be in a committed relationship with the bears. They are defensive in nature. So they will not make you, your moolah in buoyant markets. Or keep it for a long time frame. Most likely to work. The Infrastructure sector is good ally of the bulls.
-          -Mid-cap and small caps mostly outperform large caps in the Bull Run. On the flipside, they may not work in weak zone. And small caps will get wiped off.
Ok, so if you ask me what does the market say now? I say the bulls are not exhausted yet. There is good scope for the Sensex to hit the 20 K levels. What stocks look good to me? I say Onmobile Global, Shalimar paints, Dish TV, Syndicate Bank, Polaris, Corporation Bank, MT Educare, Dena bank ( Above 105 –Target 125 ) , Motherson Sumi , NRB Bearings .( All on a upside of about 20% ).
So markets are cruel but can be endearing. You can love them and hate them at the same time. But I’m certain it’s difficult to leave them.  So, I say we devour it by upgrading our knowledge and skill sets. Because it’s an exciting place to be!!!
*** Disclaimer: Invest in these stocks at your own risk and if you do book profits, send me some***

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