Tuesday, October 30, 2007

Sensex at 20k - outlook

Sensex touched 20k. Smiles all around faces who are reading the news in TV. But i found many of the traders lost out the rally and they have not made any big money in the 18 to 20k rally during my normal interaction.

The point of mislead are many of the TV anchors are baby bulls and they mostly have not seen any bear market. Hence, they tend to over hype the upward rally.

Outlook: Caution is the buzz word and focus on stock picking carefully. Buy the performing stocks like capital goods, power, realty, banks and fin serv companies during correction. Avoid IT stocks, Pharma stocks, export companies in near future.

US markets are running with a double edged sword. If they cut interest rates tomorrow, oil prices would go up, dollar would fall and thus creating some imbalance in overall economic scenario.

If they leave the interest rate unchanged, only stock market would be affected. Housing Loan borrowers who are squeezed in credit crunch would anyway are in process of re-negotiation of their loans and some 2m homes are waiting to be grabbed in USA already.

I feel this could be the near time peak for the markets and strongly advise caution on herd mentality of buying stocks. Stocks are not going to fall drastically but might not go up much also from this level. Correction is good for everyone at this level.

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