Sensex Today : Sensex sheds 350 points

Correction a welcome move for New year

The sensed tanked 350 points today. Market sources are attributing the fall to the weaker asian markets. The asian markets were weak following Thailand's central bank statement that international investors must pay a 10 percent penalty to take funds out of the country within a year. The Thai central bank's currency controls heightened concern about emerging markets. However I see more into today's correction than mere the asian play.

Well, I believe that the markets are gearing itself up for the next year and hence it becomes imperative for the markets to correct a bit in order to start the new year at a modest note. The newsflow are just aiding the biggies to drive the markets in this direction.

Markets to remain volatile

On one hand some big FII's are on the selling spree, there are others who are waiting on the sidelines to invest in Indian story. This will lead to volatility in the markets with selling pressure to continue and at the same time investment at lower levels to gather momentum.

The right approach at this stage is to enter the fundamentally strong stocks at such dips. For example Reliance Industries , L&T, ONGC are few such stocks where entry can be made at lower levels. These and similar stocks will be the leaders in the pull back rally.

The tale of Two IPO's

We are through with the Cairn and Tanla IPO's and both had a contrasting finish. The Tanla solutions IPO met with good success with issue being oversubcribed 38 times and the issue price was fixed at the upper band of Rs.265.

Cairn energy, which created lot of exictement with pre IPo biz, failed to eventually impress the investors with most research agencies coming with a long term outlook on the stock. This shows that the primary motive of the investors remains to make big bucks in short time frame from the IPo listings. The issue price has been fixed at the lower band at Rs. 160. With lower subscription numbers , the chances of listing gains are bleak and investors investing for listing gains may be disappointed. ZEE News has reported quoting a research firm that the issue may trade between Rs.89-174. However this is a very broad range. Investment Guru blog will publish its outlook once the allotment status is out.

Stocks to watch
Investors should consider buying on dips in Reliance Industries, Larsen & Tourbo, Punj Lloyd, Yes Bank and Infosys with a short to medium term outlook (2-4 months).

3 comments:

May said...

hello rajesh,

was cairn ipo a really bad issue as itis made out to be,various forums i visit have made cairn ipo retail investors look foolish.
Further the listing price indicated by ZEE news has further created panic.

Many brokerage houses had recommended to subscribe even moneycontrol.com giving the IPO above average rating.
can you throw some light on this issue.

Rajesh Soni said...

Hi May,
Cairn energy as a business model is undoubtedly a good one and it is a promising company.

However, Investors have a tendency to make fast bucks and cairn energy is a long term story. The depiction of this IPO by majority of research agencies as a long term bet has made investors shy away from the IPO.

There must be some relief with IPO finally priced at lower band. However, I would not buy Zee news listing price as the band they have suggested is quite big and doesn't make sense.

QUALITY STOCKS UNDER 5 DOLLARS said...

Excellent post