ithought market wrap 55, 9 Dec 2011

Quick edit:
Everybody thinks that the BSE sensex will hit 14000 or 12,000 before it rebounds. We are told that the market simply cant go up without going further down. Really? Experience actually tells us to believe in the converse. Nobody knows where the markets will bottom. Actually, the markets have a relentless guile in proving such predictions wrong. Then, how do we invest in such volatile times? Do we invest at all? Of course we do. In fact, investing is the core of what we have done all our lives. The simple belief we follow is that we will buy when stocks sell cheap and buy even more when they sell cheaper. The core belief is that if something is valuable at a price, it only becomes more valuable at a lower price. Sounds simple, right? But, investors overlook this simple philosophy of investing and place faith on their own ability to time things perfectly. In our view, wanting to be a great timer is the easiest way to get left out of the ride from skepticism to euphoria.

Impact:

FII’s bought Indian equities for most of the week. Though the buying was muted, it matters that they have been net buyers through the week. Significantly, DII’s made matching sales. The economic data released during the week only tended to reinforce the worst fears of the pessimists. The Government officially placed many issues in perspective. The Government put FDI in multi brand retail on pause mode, acknowledged a slowdown in GDP growth, released revised trade data which factored earlier distortions and ended the week releasing mixed numbers in revenue collections. The markets did not really find anything in the released data to reverse its negativity. The global events unfolding on the European front will be closely watched over the weekend and the market will take cues from these events. Overall, this weekend will be a tense phase for global investors as the politicians are faced with the difficult task of reversing economic excesses across Europe.

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