Where will the markets go from here ?

Pessimism rules, Volatility to continue with downward bias

It's more than 10 days since the blog has taken note of the market scenario. However, I have been sounding investors through my replies in the comment section. Nothing much has changed since then. Markets are tumbling each day and every effort to pull back is thwarted by the stronger selling pressure. Mutual funds too have joined the selling bandwagon due to redemption pressures.

How the immediate future looks like ?
It's a million dollar question and actually, nobody has a definite answer to it. At the best one can give his or her perspective based on experiences. However, lets try to find a reasonably accepted answer to the above question.

Global cues would remain on forefront
Yes, due to timing differences the other Asian markets open before the Indian markets and then a follow up process begins. Indian markets are , to a large extent, mirroring the global downtrend in the emerging markets. I sometimes wonder why can't 'we' set an example and make the global markets follow us instead of we following them?? Ever thought about it !!!

US Interest Rate hike on the cards
This is another alarm bell for the emerging markets including India. A rise in interest rates in US makes the emerging markets less attractive for FII's from risk reward ratio. News are alive that we may witness another round of rate hikes by UD Fed.

Back home, the same story
Why to blame US only for all wrongdoings, the interest rates are set to harden in our own country. RBI has given clear indications that interest rate would rule hard in the time to come.
This will adversely impact both investors as well as corporate.

Quarterly Results, The Silver Lining !
Yes, here is a catch. A good set of numbers by Corporate India may make the days brighter on the bourses and remove the clouds of pessimism which is hovering large on the investors mind.
A good set of numbers may prove to be stepping stone in moving towards value based buying in stock markets. So keep watch on the quarterly results and hook along the winners!

From above clues, it looks like that the coming days would be tough for the markets as it struggles through lot of external factors and it would a challenge for the markets to sustain the rallies in course of volatile trading. No doubt that fundamentals are intact and will definitely take the markets higher in long term. However, the next stage for markets would be to consolidate itself and stabilize at certain levels. This would be a Key factor for markets to revive itself from the shocks it has suffered in the month of May and June.

The suggestion for investors is to keep a close watch on markets and keep accumulating good stocks in small quantities at every fall. Don't wait for the markets to bottom out as you never know when they would. Avoid over exposure to midcaps and ignore small caps till markets shows clear signs of recovery. One can also look at good dividend yield stocks as they offer hedge against high volatility.


vivek said...

Hi Rajesh,
Your article was very good. You are advising to invest in small quantities. But I have no cash left for further investing. I am invested heavily in Gujarat Ambuja, Reliance energy, NTPC and reliance petroleum and ITC. Please suggest whether I should hold these or switch to some other companies.
your advise is highly valued

Anonymous said...

The markets are falling down day by day. FII's are cheating the Indian investors by dumping the stocks at higher prices and putting market to a crash. i feel govt. should take some measures to stop FII's from taking control of Indian markets and playing with hard earned money of Indians.

A.K. Sharma

Anonymous said...

when markets crashed on may 17th, our finance minister came on tv saying that people should invest at current levels. markets are down continously since then. now there is no statement from the ministry on measures to stop this free fall. I have invested around 1 lac during the may 17 crash and now sitting on a huge loss. all the experts on tv channels have become long term advisors. they are same guys who used to give big targets few days before the crash. where have their analysis disapperaed now? i think stock markets is not a right place for common man to invest.

arun said...

hi sir,
is this the time to enter,if i hav a one year perspective????

guide please.

Narendra said...

Hello Rajesh,

Please suggest some "good dividend yield stocks" which we can buy now.


ritesh said...

sirg ap kahan chale jaate hain....
ap ko kya lagta hai is the bloodbath over
and can we start buying....

your admirer

avinash vajpayee said...

Hello guru RAJESH JI,

DO you think that we should average out the cost of our belongings.Or do you think that we should enter into new stocks and forget about averaging.If you can please guide i will list down my belongings and the rate at which i bought and also the current(friday closing rate) rate.If you can just guide me.............

1.Infosys @ 3200 (2812)
2.Aftek infosys @ 84 (47.5)
3.GVK power @ 287 (178.3)
4.Tata infomedia@ 210 (133)
5.Hindalco @ 228 (159)
6.Patel engg. @ 440 (280)
7.Bajaj auto @ 3112 (2600)
8.Tata motors @ 820 (724)
9.Suzlon energy @ 980 (877)
10.Rel ind infra@ 630 (390)

Investment in all the above stocks are equal i.e almost 10% in all of them.I am a small individual investor who started to invest only in march this year.Before i could make any profit i have already lost too much.I am a regular viewer and visitor to your blog.Please take some time out and guide about the strategy to be applied.I am ready to keep my investements for a year.I have not sold anything in this crash.

Your guidance will be invaluable. Also point about any particular stock if you feel that there is a considerable margin of safety.

Thanks and regards,

Smart Money said...

Hi Rajesh,

Good blog. I have linked to your site. My blog is on Trading Quotes and please consider putting a link back to mine. I am sure they are useful for your readers.

Trading Quotes


ravi said...

sir ap to gayab hi ho jate
hain bhai...kahan hain ap....

Anonymous said...

rajesh ji
please put your views on the current market situation

Rajesh Soni said...

Dear Friends
Reliance has convened an AGM today and on the watchlist will be the announcement of the Retail expansion plans. In line with the Investment Idea on Reliance Industries, Investment Guru would bring a post on the annoucememts in the AGM and its impact on the stock.

Rajesh Soni said...

Hi Vivek
You have invested in good companies. So I would advice you to hold on if you are long term investor.

Rajesh Soni said...

On Arun's message: Yes Arun, you can eneter with 1 year perspective in fundmentally strong stocks.

On Ritesh's message: yes, the bloodbath seems to be over. However, it has shaken invetsor's confidence and will take some time for markets to surge ahead. Right now one should be cautious and stick to fundamentally strong stocks.

On Ravi's message:I went for a hectic visit to Jaipur for 10 days. So couldn't blog. it's difficult to be regular though i try to be.

Rajesh Soni said...

Hi avinash, you can get out of Aftek infosys,GVK power,Tata Infomedia and patel engineering. You can put some money in reliance Industries and L&T instead.You can hold on to other stocks.

Rajesh Soni said...

Hi narendra
You can look at stocks like Reliance Industries, Infosys Technologies, Satyam,TCS,NTPC,SBI,GE shipping to name a few for good dividend yield