Sensex melts on selling spree; down 289 pts.

FII's play spoilsports, mutual funds save the day
The Indian Stock markets witnessed a selling spree this week resulting in the Sensex melting by 289 points. Heavy selling was seen from FII's who chosed to book pofits in the month of October to inflate their books and bank on good bonuses for the year-end party.
Posted by Picasa

What has changed for the markets ?
Few new scenarios have come into picture. First and foremost is the talk about reallocation of FII funds to the emerging markets in the month of January. The street is aloud with the news that FII may reduce their allocation in the Indian markets and move some money to other markets such as Japan.
However, from the fundamental perspective, nothing has changed in the Indian story. The Q2 earning season started on a good note with Infosys increasing its guidance and outperforming the street expectations. However, the judgement in Lipitor case went against Ranbaxy and bought doom to the pharma scrips.

Mutual Funds: What are they doing ?

Mutual funds remained net buyers and helped the sensex to save itself from further meltdown. The reason being that some of the mutual funds have garnered huge subscription from their recent offerings and they have to invest the same in the Indian equities. Mutual funds are using these dips to enter at better levels.

Who are worst effected?
Those investors who have invested in equity markets in last two months are the worst effected from this meltdown. However those who are invested since last 6 months are quite better off though they too had dint in their profits

Has the long term outlook on India Changed ?
Absolutely not. Though the markets may see some more downfall before moving up, the long term scenario of strong bullish sentiment still remain intact.

Advice to small Investors
Investment Guru advice the investors not to panic under these situations. This is an outcome of the liquidity movements and hence will not impact the long term investors. When the FII's do the reallocation in Janaury, Indian markets will again see huge buying from them.
Investors are advised to have a long term outlook while buying stocks. Those who are sitting in cash are advised to use such dips to slowly start buying in stocks which have good fundamentals but are battered by this meltdown.
Investment Guru blog will continue to guide you in your journey to Investing.

Happy Investing !

19 comments:

Anonymous said...

A fantastic blog. Keep it up. Here's a subject that interests many. I have a vacation rental website with listings of vacation rentals and vacation homes throughout the USA and more.

Come and check it out if you get time :-)

aman said...

Dear sir,
I bought 500 shares of Skumars based on your reco @ 27.20 The stock after touching a high of Rs.60 has come down to 48. Should I book profits or hold ?
Your write-up on the markets is excellent and I am an avid follower of your blog
Aman

Anonymous said...

Suzlon IPO allotment is out !
Check the following website to know your allotment status

http://karisma.karvy.com/investor/jsp/home.jsp

Unknown!!! said...

Rasoni ji..your comments on ITC..is it better to but now?

Anonymous said...

Hi

What to do with SUZLON on listing ..
Please share ur Listing Strategy.

Thanks in anticipation

Gaurav

Rajesh Soni said...

Hi Aman,
I would advice you to hold on to the stock. This is a long term hold and should give you better returns than waht you are getting now. If it comes down further, one can accumulate some more.
So stay invested.

Rajesh Soni said...

Hi Mr. unknown
ITC is a good stock but it has risen quite sharply in last few months. SO at current price it looks fully priced for short term, however if you want to invest in this stock for a long term period (say 2 years), then it is a good buy even at these levels, The company is a very well diversified company has recently expanded its businesses which will give fruits in coming years. So,good from long term perspective.

Anonymous said...

Please comment on Gayatri Sugars? is ti better to hold now. I have 1000 shares of it.

Satya said...

Please comment on IFCI.
I have 200 shares of at 16.13.
Can I expect returns in long term?

Rahul Munjal said...

Dear Sir,
I have 2000 shares of TeleData and bought @ 28. What should i do of them?

Also, i have 1000 of Tata Tele @ 30. What's the future.

Will be highly obliged if u can help me know the future prospects.

Thanks and Regards,
Rahul Munjal

Anonymous said...

Buy Vishal Exports for target of 8.80 in one months time....

Anonymous said...

Hi guruji,
Can you please share your views about GIPL ipo and KM Sugar IPO?
Any stocks you recommend buying at current levels?

Thanks,
Yogesh

Rajesh Soni said...

Hi anonymous ,
i do not track gayatri sugar stock.

Rajesh Soni said...

Hi Satya,
I do not see any major move in IFCi for long term. Once some comfirmed news comes for its merger with either IDBI Bank or PNB, the stock may see some jump to Rs. 20. You can use that to get out of the scrip.

Rajesh Soni said...

Hi Rahul Regarding Teledata:The stock is not showing any strong downward or upward trend.
The stock is marred by issues with its promoters . AGain, we need to hear something on the stock to get it on the track. However , I do not see any major downside. At the levels you have brought, I would suggest you to hold it for some time .

TataTele's long term future holds good . However one should not expect any big bucks in short term in this stock.
ALl depends on how Tata's take this company forward. In 2 years you can see a price of Rs. 80 on the stock if everything phans out well.

Rajesh Soni said...

Hi Yogesh,
You will probably see an update on GIPCL and KM sugar today on this blog

I am going to put an investment idea on the blog shortly.
I hope you got the answer after seeing the markets as to why I was not putting Investment Ideas till now.

Cheers!

satya said...

I took Geometric software solutions @85. Do u have any comments on that scrip?

Anonymous said...

buy vishal export -- one month target is @8.80

Blogger said...

Did you know you can create short links with AdFly and make $$$ for every visit to your short links.