Tuesday, December 7, 2010

Mid caps take a beating

I have returned to Delhi after a long holiday and three days of work in Mumbai. In Kolkata, I did not have access to the internet for many days. (Finally, I am acquring a data card.). In Mumbai, I was very busy. So, today, I opened my charting software and had a big surprise.

Paral has fallen from 600 to 295 with a down circuit today. Hanung Toys is at 225, down from 400. Any number of so called momentum stocks are in bad shape. They seem to be undergoing a bear market even while the Nifty is at 6000.

This is NOT a surprise. The rally in many mid caps and small caps was exceptional, probably unjustified. Anyway, every rally will be followed by a correction. Since the up move was parabolic, the down move will be equally sharp. That's the law of the markets. Most of these will become buying opportunities once they begin building a base. This takes time.

TV

I am pleased to write that I will be regularly available on ET Now - from Monday, December 13. Hopefully, almost every day. I hope you get the channel through your cable / digital operator. If not, you may like to get it quickly. Me, Ashwani Gujral, Rajat Bose, Deepak Mohini, C K Narayan, will be together in ET Now, giving a fairly experienced panel to viewers.

6 comments:

ANAS said...

Respected Sir, its me again...

it was realy a relief to hear from you.

HOPE YOU ENJOYED YOUR VACATION, IN THE CITY OF JOY.

thank you.
anas elias batla.
Kolkata.

sidgopal said...

What time on ET NOW? Any specified hours?? Please do let know.

scorching said...

Hi sir.. Great to hear from you after long time.. Hope you had a very good vacation..
Also happy to hear that both my favourites (you and Rajat Bose) appearing again on same channel..

Thanks
Manju

gourv said...

Hello Sir,

Nice to see your blogs after a long time.I was wondering what happeend to you.I subscribed to the pack in tatasky which has ETNOW.cant imagine to miss u in a channel just because of no subscription.

Regards
Gourav

bkm said...

Dear Sudarshanji,
It was nice to hear from you after a long gap.
Somewhere down the line in your blog there was discussion about FII flows of 2007 and now 2010 . On comparison as soon as 2 to 3 days of FII selling our market comes under pressure.
As per my observation from 2007 to 2010.
Jan '07 to july' 07: 41000 crs net
buy.
Sep'07 to Oct'07: 33000 crs. net buy.
Jan'08 :17000 crs. net sell.
May'08 to nov.' 08: 43000 crs. net sell .
Mar'09 to apr'10 :125000 crs. net buy.
May'10 :8600 crs. net sell.
jun'10 to nov. '10 :110000 crs. net buy.

And we all know the consequences of above timeline on sensex / nifty.

There are plenty of stock with history of loosing 90% of values from peak when FII sells. and multiplying 10 times from the bottom when FII buys.

Today is the third day of FII sell(as per BSE site):
8/12/10---> 1484 crs. net sell
7/12/10---> 522 crs. net sell
6/12/10---> 201 crs. net sell

If one breaks up net 'sells' month the consecutive dates of net sells increases and stays between 200 to 1500 crs. as above indicates down trend.
So at least till FII does not come into buy mode for 2 consecutive days , longs should be avoided , however attractive the stock price may look.

But as per your idea one must decide and go along with market trend where ever it takes.

Time to watch:

regards
bkm

Nirav said...

Dear Sir,

I want to ask you about Proprietary Trading. I know little bit about it. But I want to know that as a Career i.e. as a Prop Trader How is a future in India? What are the opportunities as Prop Trader? Because I have read that many foreign companies are closing their Prop Trading. So as a career is it good for the future in India?

Do reply.

Thanks.