Market Dynamics - The approach

The sensex had gone by more than 550 points on 10th May'2010,in a single day to close at 17,330.

Today - on 7th June'10,  the same sensex has retreated down to 16,781 ( today’s fall – 336 points ) . In between , the sensex vacillated between 16,750 – 18,000.

In today’s market, we are stating that the possibility of a fall is more predictable than the rise. This is purely on account of the market being driven by forces of sentiment , as noted below :

• 10th May – the market gave a thumps up as the IMF and the other creditors put forth a rescue package for Greece.
• 0n 7th June- the market gave a thumps down , as rate of jobless in US grew more than anticipated; Hungary said that it could have a Greek – like crisis.
• In between these days, based on various news , the sensex vacillated, irrespective of the impressive results by majority of the Indian Corporates

This period of uncertainty is the time of cherry picking of stocks for the long term ( 3 years ) and also for short term ( 6 months) . The market is fairly priced today and the cheap valuations which we had in Mar 2009 are non-existent.

The sectors on which we are bullish and are selectively buying include - Pharma ; Banking ; Education ; Auto ; Construction ; Heavy Engineering ; FMCG .

Telecom is one space we are avoiding (though we keep a watch on it )

The strategy for investing for Mutual Funds as shared in May’10 does not change and we did execute the strategy.

For equity, its still cherry picking and it’s the way to grow.

Happy investing ( albeit, with a bumpy and volatile ride).