The Holi celebrations will be colorless for the people who had invested their hard earn money in Indian stock market. The market that was making new highs in the year 2006 is making new lows on every other day. It is very difficult time for the retail investor, institutional player and marginal player. As the Asian and US markets fell to 3-5 per cent and dollar sank to record low against euro and Swis Franc, Indian stock market could not escape from the blow.
Yesterday the Sensex that closed at 14809, down 951 points has forced Finance Minister, P. Chidambaram to speak on the issue. He said,
The US sub-prime mortgage crisis has impacted India in a moderate way. Our assessment is that impact on India is second order impact and a moderate impact. The Government would take every possible step to contain inflation.
Owing to this, many lovers of the bull market are trying to find new ways to minimize their losses.
Brief of Current Scenario:-
1) Foreign investors are exiting from market because of US recession.
2) Indian MFs are sitting on huge cash and waiting with patience to enter once the market stabilizes.
3) Retail investors are out of market in fear of more down trends.
4) Indian Economic Fundamentals are still intact. No recession predicted in India.
So now even though FIIs get out of the market now, the market becomes the trading ground for Indian investors. The current Stock values can go more down maximum of 10% till March end.The Indian Mutual funds cant keep the cash surplus without earning penny from it and they would start investing in those company stocks who have given good FY results. This will lead in true investments and actual stock evaluations.
The retailers will then return to the market as the Sensex will slowly start moving positive. Now, if the FIIs return back to Indian Markets, it’s a win-win situation for all Indian investors as they are already in market before the FIIs and they can book good profit once the FIIs start investing.
But what about the current inflation rate that could hamper the industrial growth? Mr. Chidambaram has requested the Reserve Bank of India to take monetary steps to maintain price stability.
My Conclusion: Start investing today as the current levels seem attractive, even though considering 10% discount till March end.. a definite profit of 30-40% can be booked post Mid 2008.
