The Third Eye : Take the bull by its horns

The markets have become quite volatile with the sensex touching new highs. The sensex touched all time high of 12024 during today's session and the rally was spread across sectors. However the focus was on Cement, Constructions and IT sector stocks. The recently listed IPO's have continued the dynamic listing trends and investors may continue to put their money in IPO's.

With the bull run on the way with increased volatility, the third eye showcases some stocks that hold promise with a short as well as medium term perspective and can be played accordingly. So here you go !

Petronet LNG : The company has delivered excellent financial performance and is poised to further growth. The stock had come down from its high of Rs.72 and is currently trading at Rs. 57. The company has also approved raising of $100 Million funds through FCCB to part finance its terminal at Kochi. The third eye is visualizing some action in the stocks based on the recent developments!

Gujrarat Ambuja Exports : The company has consistently posted good results quarter over quarter and the company is on the growth track with increase in the topline. The stock price at Rs. 25 leaves scope for further appreciation.

Dabur Pharma : This is another stock which is fast moving towards leadership position in tis segment. The results have been quite encouraging and the stock is moving north to catch up the valuations.

Happy Investing!

( Disclaimer : The third eye column on the Investment Guru blog is an indicator of a possible action in the stocks discussed . It is not a recommendation to buy or sell a particular stock nor does it give any targets for these stocks. Investors are required to use their own discretion and consult their financial advisor before buying or selling into the stocks discussed in this column.)

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Market Watch: Is sensex losing senses ?

Dear Friends,

It's a great pleasure to be back on the blog after a gap of nearly one month. The last one month was full of action with sensex touching landmarks of 11 k and 12 K. Its looks like that the Indian stock markets have found a unleashed energy source of relentlessly moving up and as if there is no doom day to happen !

The recent leg of the bull run was dominated by the large cap stocks and those who have bought Reliance Industries stock would be jumping with joy. The stock has delivered excellent returns to its investors and has jumped from 700 to 1000 in 3 months. The tech counter was buzzing with strong numbers posted by IT companies and robust guidance by the bellwether stock Infosys. My Investment Idea on Gujarat Ambuja which was given at a price of Rs. 67 also reached its target (actually exceeded it in a big way) and is currently quoting at 120.'

Aksh optifibre saw a lot of volatility and I saw some hot tempered comments from some of our viewers when the stock touched a low of 62 before striking back to Rs. 80.

Its time to take a stock of all the investment ideas discussed and I will shortly start reviewing each idea in the current context. Will also post some new ideas.

Coming back to the markets, Indian stock markets recent run have proved the point which I wanted to make in my earlier article on India's growing dominance in the world markets and the maturity levels of the Indian stock markets.

But at the same time , I want to let you know that we should understand the sensex psychology before getting sweeped away in the wind of fast-bucks tactics. India Inc. has been successful in selling its growth story to the foreign as well as Indian investors and what we see as a result is the mad rush to occupy a pie in the Indian growth by Indian as well as foreign institutions. No body wants to be left behind. In such scenario, the supply of stocks gets sucked up by the unrelenting demand and hence the stocks prices go sky-rocketing.

In such a scenario, the markets starts factoring even the 3 years forward growth and buys in anticipation. Hence, we should understand that the value we are putting on a stock is based on the assumption of a particular performance of the company for next few years and hence whenever the investors would find a mismatch between the anticipation and actual performance the stock will be punished, sooner or later. This will lead to volatility in the stock markets.
Hence , Investors are advised to invest in fundamentally sound stocks at this juncture and keep themselves away from purely momentum stocks.

If you are trading on some news or momentum, it is advisable to be disciplined and not convert those trading moves in your investments.

On my headline for this post, No, the sensex is not loosing its senses. The leading world markets are currently trading at 1 times or more their GDP to market capitalisation and Indian stoks markets are about to touch that magic number. This shows that the stock market is truly reflecting the growth pattern of the economy.

The future direction of the markets will be ascertained by the ongoing results season. Invetsors are advised to regularly keep booking profits henceforth and if the momentum continues to get reinvested to enjoy the next round.

Will dwelve upon some stocks that will outperform their peers in the next post !

Happy Investing ! Read More!