DARK CLOUDS – WHERE’S SILVERLINE?

                                                                                                 Oct.15, 2008.

                                  

                          DARK CLOUDS – WHERE’S SILVERLINE?

If you take review of my last two write ups

1)   PANIC FALL IN STOCK MARKET CREATES TENSION FOR INVESTOR’S. Dated 28^th April, 08 and

2)   SHARE MARKET DIRECTION----DEVISTATION. Dated. 15^th June.08

In both these write ups I categorically mentioned today’s market condition. Both these write ups I hinted reader’s/Investor’s -- Sensex is Topping out TIME WISE &PRICE WISE be alert. We are heading for a big fall i.e. Blood bath and exactly we are experiencing the same. Now we are finding “Ray of light in dark tunnel”. Again over here my favorite Febunachi Time Series will help us.

As per TIME CYCLE DATE (T.C.D.) 21^st to 28^th October, 2008. These 8 days are very important, in these days market may bottom out.

Other Important reasons on which we assume that “Market is about to start its’ bottoming out process". They are:-

1)      Blue chip shares are available below its “BOOK VALUE.” & Its’ MARKET CAPITALISATION. One instance is sufficient. At present we are around 11,000 but share prices are available on 8,800 sensex level of 14^th June, 2006. It’s a perfect Market capitulation.

2)      In my earlier write up I mentioned BSE SENSEX 14,000 level is very important support level in any given circumstances. If its broken with good volume, Please exit from the market (Sell/liquidate your portfolio). What we are experiencing is Repulcation of breaking that important technical level. Sorry to say Sensex may break psychological level of 10,000. Now level is not important lets once for all “Poison should be out of system”. In this aberration Investor must start investing10% at every fall (don’t deploy entire amount at one time.) and match their entry level with T.C.D. i.e. between 21^st to 28^th Oct, 2009.

3)      At present we are off nearly 50% from 10^th Jan.08. At that time Sensex was 21,000. Within 9 months this sharp correction occurred. (Individual stocks particularly Real Estate and Construction have fallen more then this.)

      

4)      At present B.S.E.Sensex P/E (Price Earning ratio) is around 10. Its first time in 7 years. We are getting such attractive level. Long term investors & Institutional Investors will enter at this level.

5)      R.B.I. cuts C.R.R. by 2.5% by which one lacks core available to Banks of which some money comes to stock market.

   

6)      Correction started in crude oil which will help to curb inflation.

7)      Golden rule of Economics is ‘ONE’S EXPENDITURE IS OTHERS INCOME’ Indo-U.S. Nuclear treaty helps Indian basic industries like Steel and Cement to boost up demand in this sector. To construct Nuclear Reactor requires special knowledge and advanced technology which is available with L&T, BHEL, H.C.C. etc. This move will help Indian Industry to come out from recessionary trend.

Friends it’s my personal appeal if you believe in me this is a right time for long term investor. Time has come to keep all negative thoughts aside concentrate on your buying list at every fall invest only 10 -15% fear of breaking 10k is there so take help of T.C.D.(21^st to 28^th Oct.2008 Between these days bottom may form). In this pessimistic / gloomy environment I always remember Investment Guru Sir Peter Lynch’s historic quote “Bull market born on pessimisms, grow on skepticism, mature on optimisms and die on euphoria. So, best time to buy is maximum pessimism. Exactly that’s what we are experiencing right now and that’s the Silver lining in the dark cloud.

Ashish Thakur

           

            Note:   This write up appeared in Marathi news paper “Maharashtra Times” (Times Group circulation dated 22^nd October, 2008)