Weak week for markets
Inflation data today to drive market sentiments
BY SAJJAD BAZAZ
BAD news kept the markets in oscillating mode only to register downward trend during the week (May 7 – 11). The markets lost 3 per cent each as the Sensex went down by 538 points and the Nifty declined 158 points in five days. The Sensex fell by 127 points to 16,293, while the Nifty fell 37 points to 4,928.
The week on Monday had started on a dazzling note when the union finance minister Pranab Mukherjee announced about the government's decision to defer the application of General Anti-Avoidance Rules (GARR) by one year until 1 April 2013. This led to surge in markets. Next day, stock prices plunged sharply following heavy selling by the investors. The reasons: a weak lead from European markets and RBI remarks indicating no rate cut in the near future. The Sensex lost 367 points while the Nifty lost 114 points. On Wednesday, foreign institutional investors (FIIs) resorted to heavy selling and brought down the markets. Thursday also witnessed markets down- sensex down by 60 points and Nifty 37 points.
On Friday, the weak Index of Industrial Production (IIP) data released by the government showed industrial production declined by 3.5% in March. Notably, the market had expectations of a 1.5 percent rise. Last year in March it was higher at 9.4%. This, on the day, had an impact on the markets on Friday.
The weekly performance reveals that the markets have been suffering because of lack of reforms initiatives and the global concerns. The depreciating currency versus the USD also added to the weakness of the markets. Under the circumstances, what’s the future course for the investors? Various inputs are there from markets experts. Some believe that “markets will start moving up sustainably, only once there are indications of reform initiatives being taken up by the Government while a section on the backdrop of the markets grinding down on low volumes suggest ‘best to move out of markets and stay in cash.’
Meanwhile, Inflation data due on Monday will be a key for markets. Kotak Securities described the market outlook as: ``Future RBI action and foreign flows will likely be dictated by Government`s reform initiatives and the outlook on the monsoons. We believe that, markets will start moving up sustainably, only once there are indications of reform initiatives being taken up by the Government.”
Most investors in J&K look at stock market on a very short-term basis. And that is what is worrying. People want instant returns. For some people holding a stock for more than one day becomes an investment. This is worrying. Once I asked India’s one of the top stock market analysts about some tips which can help to mitigate risk of losing money in the stock market. The analysts, an authority on the subject, narrated his own tale of losses he suffered in the market. Some years back, he had obtained a consumption loan of Rs.50,000 from Citibank and invested it in the stock market. After six months period, he was delighted to find that his half a lakh rupees investment was appreciated and stood at Rs.2 lakh. He started calculating appreciation on his investment at the same pace and without any planning and knowhow of the market he reinvested the money in some other shares with an objective to gain more and more. But after some time, he was shocked to see that the value of his investment portfolio had gone down miserably. He had even lost 50% of his original investment of Rs.50,000.
Shocked and surprised over the scenario, he kept his head cool and thoroughly tried to understand the market. After some time, he was able to hold the grip of the tricks of trade. Later he became one of the leading stock market analysts of the country and even headed a reputed new generation private sector bank.
So, the best thing is to keep cool while in the market. Every day you can find a lot of hot stocks in the stock market. Most of them may seem promising, but the fact is that a good number of these stocks might not be as profitable as you think. In light of this scenario, it is very important to know how to choose the best trading and investing opportunity and take advantage of them on a daily or weekly basis.
(The views are of the author & not the institution he works for.
Lastupdate on : Sun, 13 May 2012 21:30:00 Makkah time
Lastupdate on : Sun, 13 May 2012 18:30:00 GMT
Lastupdate on : Mon, 14 May 2012 00:00:00 IST
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