Tuesday, October 09, 2007

1000 point rally in a single day - and I thought I had seen it all

Back in Feb 2006, I wrote a post when Sensex hit 10,000. It was somewhat like the first under 4 minute mile, I didn't believe it was possible. Looking back it seems childish. Today the Sensex crossed 18,000 and rallied 1000 points in a day.

From 14000 to 15000 it took 153 days, from 15k to 16k 52 days, 16k to 17k 6 days, and 17k to 18k 8 days. The party is on in the stock market and suddenly talk of 20,000 before Diwali 2007 looks close at hand. The numbers are mind boggling.

As I mentioned in my post of 2006, the real driver is the liquidity from FIIs. Last month alone FIIs invested close to 3.5 billion USD in Indian markets. Ofcourse, when they leave, the hangover will be as worse. General consensus seems to be that FIIs have no other emerging market providing such consistent growth stories with low inflation and a democracy to boot (in other words, we don't know why but the foreigners are buying Indian stocks like crazy). Decoupling is another favorite jargon now a days.

In Feb 2006 I had picked three stocks - SBI at Rs.870.00 , NTPC at Rs. 119.00, Hindalco at Rs. 170.00. Today their value is - SBI 1890.00, NTPC 220.00, Hindalco 164.00.

So Dabbler's picks would have given you a return of 45 percent per annum. Any one who wants further picks can mail me. Three picks a month at Rs. 1000.00. I am sure that my reader's aren't naive enough to mail me. Any Tom, Dick and Harry would have achieved the same returns if he had picked any Sensex stock.

May be I will write a similar post on June 2009 when Sensex hits 40,000.

3 comments:

krishnan said...

Albert Einstein said, "The issue of income tax is too difficult for a mathematician to understand. It takes a philosopher." If he was here today, he would have said the same about stock market.

PS: Stock market pathi onnume theriyalenna ippadi edhavadhu solli manasa thethika vendiyadhudhan. :)

Ram N said...

probably the P-Notes flows and the subsequent move to tighten these seem to be also part of the sensex story ...
Check http://inhome.rediff.com/money/2007/oct/17spec.htm - for info on these jargons

Bala said...

chenthil,

what liquidity giveth liquidity taketh away.. at the peak trail PE for nifty was 27, which is solidly in Ketan Parekh territory.

For the next year, hold equity if you must else book your profits and switch to safer instruments