Market Matrix – The underlying wisdom of stock market

By krsna Khandelwal – A veteran market analyst

The Sensex ruled at 12736 points in Oct 2006 and it is now hovering around 14500 points at a PE of around 18. Since October 2006 a lot has happened . The corporates did well and the indices went to touch dizzy heights and then retreated equally forcefully during the period under reference. It is said that the course of indices is unpredictable but what you would read below would certainly convince you hat the basics cannot be negated in longer time periods.

I am inclined to give you some inkling in to future possibilities in the markets. At present the PE for the market as a whole is quite OK for the entry to be made. Equally true is the possibility of some bad times faced by the corporates and earnings may dwindle but since there already has been an elapse of considerable period of time since October 2006 and the PE level is lower now than it was in October 2006, the fall in earnings, if any, would not let the share prices go down much. There would be a higher discounting of earnings instead. This should keep the worry about the melting of the markets in view of some dent in earnings at bay. On the contrary, should the environment improve in terms of larger capital inflows and lowering of interest rates along with the lowering of CARR ( this is expected too upon the inflation numbers coming down ), there would be an forceful recovery which may terminate only after it has breached earlier tops. It is on this logic that I recommend staying invested, to an extent of one comfort.

Hari Om

BIRDINFO Stock Rx – A prescription for stock market

P.S. The interested may also see our post on Monday, October 16, 2006

Market Matrix: The Sensex Possibilities – 16 Oct 2006

Sensex milestones from 19000 level

By Sharad Khandelwal – A veteran market analyst

19,000, October 15, 2007- The Sensex crossed the 19k mark for the first time on October 15, 2007. It took just 4 days to reach from 18k to 19k. This is the fastest 1000 points rally ever and also the 640 point rally was the second highest single day rally in absolute terms. This made it a record 3000 point rally in 17 trading sessions overall.

20,000, October 29, 2007- The Sensex crossed the 20k mark for the first time with a massive 734.5 point gain but closed below the 20k mark. It took 11 days to reach from 19k to 20k. The journey of the last 10,000 points was covered in just 869 sessions as against 7,297 sessions taken to touch the 10,000 mark from 1,000 levels. In 2007 alone, there were six 1,000-point rallies for the Sensex.

21,000, January 8, 2008

Hari Om

BIRDINFO Stock Rx – A prescription for stock market

Market Matrix – Nifty may move around 5250

By krsna Khandelwal – A veteran market analyst

There has been a lot of improvement in indices and everybody seems to have shed some part of the fear of impending slowdown. The RBI Governor has not acted in the manner that he was giving idea of , in light of the inflation pressure i.e. of raising the ‘repo’ rate. This may have been due to yet another interest lowering by the US Fed by 25 basis points. He , however, showed concern by 25 bps increase in CRR. I think CRR will not be affecting the economy in general but would affect the banks in some measure.

There have been a spate of results but it is mixed bag. There have been good results and bad results but none has been with some drastic impact. It can therefore be said that market would hover round this level i.e. around 5250 and will be tilting one way or the other after it notices some important trigger down the line.

The best strategy would be to encash profits partly and stay invested with the rest. There is risk in being over optimistic, however, some companies have attractive prices to be invested in right away. Please keep track of such companies through ‘panch-tattva’ guidance.

Hari Om

BIRDINFO Stock Rx – A prescription for stock market

Market Matrix: Indian Stock Market and Stock Indices as on 31 Dec 2007

By Sharad Khandelwal – A veteran market analyst

It is important to note that Sensex and Nifty could not cross previous all time high of 13 Dec 2007 on last day of the year.

Now, there are possibilities that new all time high indices for Indian market may be created in 2008.Users of BIRDINFO Stock Rx are recommended to book profits as much as possible and be in cash for right opportunities to emerge after deep correction of the market.

Wishing all our readers Happy New Year 2008.

Hari Om

BIRDINFO Stock Rx – A prescription for stock market

Market Matrix: Sensex returns vs Gold prices,FDs etc.

By krsna Khandelwal – A veteran market analyst

Friends,

Since 1991 , investment in SENSEX has appreciated to roughly about 18 times. It is also very closely correlated with the GDP growth according to Kiran Kabra. The real estate in Mumbai has grown in value by about 4 times and the bank deposits have grown roughly about 5 times since 1991 . Gold prices too has grown by 5 times since than.

In my opinion the SENSEX returns are after one has continuously adjusted portfolio to represent SENSEX which involved effort and attention as the Sensex composition was altered many times. The real estate seems to have appreciated by lesser degree but it has given the benefit of occupation and use or some nominal returns by way rent but not without some costs of maintenance and taxes. The investment in Banks’ FDs and gold has been slightly less bothersome to hold.

Supposing we divide the period since 1991 in to up to 2000 and after , the returns from SENSEX stocks would be far lesser than the other avenues of investment for the earlier period of nine years and would be astronomical for the period after 2000. This very character of the equity investment makes it not entirely advisable. You have to move in and move out at right times to be able have the real advantage of equity investment or else shun it. Further , you should be engaging services of some experienced consultant to guide you as an ordinary citizen can never find out when to get in out.

The ones who keep there investible funds in all the four pockets will not come to grieve ever. Investment through insurance policies will be a good replacement of the need to invest in FDs of Banks and direct equity holding being easier to manage. ULIPs are getting popular for this very purpose besides being giving tax relief and saving costs.

Hari Om

BIRDINFO Stock Rx – A prescription for stock market