After two weeks and back and forth action, the market is on its way up, as I was expecting. From its intra-day low of 2904 last Monday, the sensex has already gained 60 points, without anybody figuring where the next move will be, when it will unfold and what to do about it.
So, unfortunately, very few have made any money at all in this 60-point move. Fund managers are presumably clutching on to their software stocks and putting new money into banking stocks (which, by the way, is resembling a nice mini-bubble).
I expect the rise to continue in fits and starts. May be we will have an up day today and a minor fall tomorrow. It will eventually be a laboured rise that will take the index (in the best of circumstance) to 3030. I fear another round of fall from that level that should take us to — I hate to say this — a very depressing level. But we shall see after we get to 3030.
At least by now, it is clear that results of most companies do not justify the “India is very attractive” litany, that fund managers and brokers have put out routinely for one year now. For each Ranbaxy that is probably undervalued, there are four of Hero Honda (stagnant) and at least one Mahanagar Telephone Nigam Limited (shrinking).
And yet, last week while I was in Calcutta, I read Dilip Madgavkar of ICICI Prudential again saying that valuations look “very attractive”. I guess the only way to stop (irresponsible) fund managers (paid a fortune) from luring in retail investors into equity funds is by collectively demanding that fund manager’s compensation be completely tied to returns.
They will then hopefully keep quiet because they would be brooding all day long how to make two ends meet. The other day somebody from the market told me that the smart 20-something analysts confidently writing a buy on VSNL, Zee, Satyam etc. rarely buy shares themselves. Imagine the cook carefully refusing to eat his own cooking while encouraging you to do it.
Anyway, to get back to the market trend, global markets, mainly led by Nasdaq (yes, the same bubble exchange is up 24 per cent since last October) and other US exchanges are on the crest of a huge upmove that started on March 12th and is continuing. It has not influenced us so far. May be it will, this week.