Home > Education, Market View > Is this a bull market for INFY and TCS investors?

Is this a bull market for INFY and TCS investors?

Wednesday, November 7, 2007 Leave a comment Go to comments

Ever since I started writing on the blog I have been bearish on INFY and TCS. Infact my Infosys Trend Analysis post highlighted the importance of market trends by taking Infosys as an example.Ever since writing that post, I have made several people get out of their Infosys positions. Some at 2150, Some at 2000 and some at as low as 1850 also.

Today the stock closed at 1745 odd levels and fall was sharp. I feel that INFY is now entering a bearish phase and it might soon touch 1600 and subsequently 1350-1400. The probability of an acceleration in downward trend is much higher. So just stay out of this stock! Let the world analyze the stock, if you are losing money on this, you can still choose to get out.

Coming to TCS- The stock can fall to 870 levels if 980 gets broken on the stock.

I still fail to understand as to why people are sticking to these stocks despite such underperformance.

Just compare your returns if you had put 1 lakh in L&T and 1 lakh in INFY in June 2007 .

A 1 lakh in INFY would have resulted in a loss of 10,000 netting you 90,000.

A 1 lakh in L&T would have resulted in a gain of another 1 lakh netting you 2 lakhs.

Can you spot the difference? Not only did you lose 10,000 you also lost an opportunity to make 1 lakh.

And then people tell you that this is “bull market”! It is a bull market for the guy who has 2 lakhs in his pocket and not for the guy who is sitting on a loss and wondering what to do.

If you continue to be in such stocks you might end up losing money despite the bull run.

It pays to consider your “opportunity costs” while you sit on your losers!

  1. sagecapital
    Friday, November 9, 2007 at 10:13 pm

    Pranav- Your statement about TCS giving more returns than NIFTY is based on some prediction.I dunno the basis of this prediction. And on top of that use use “except certain circumstances”. Please be more specific about the basis of “prediction” and the “exception” you are talking about.
    What do you mean by “good stocks”? Looks like TCS is a good stock according to you.
    I wonder if you follow “fundamentals” or “trends”. Trend guys don’t believe in predicting the length of trends!

  2. seriouspranav
    Friday, November 9, 2007 at 9:27 pm

    though i agree with not sticking to the stock while it is on its downtrend(and it has been so for the last 4 months or more), it is better to invest in tcs than in nifty(over 10year horizon) because tcs shall give more returns than nifty in a year(except for certain circumstances).

    usually good stocks outperform the markets….. as a general trend….

    but why stick to tcs or infy when u can buy l&t, ril, rpl, rnrl, relcapital, abb, bhel and several other gems in the current market….

  3. sagecapital
    Thursday, November 8, 2007 at 8:04 am

    Ameya- you are buy and hold investor. We are trend traders. I won’t even hesitate to sell a RIL or L&T if it starts to trend down!
    If want to invest for 10 years, why not just buy the NIFTY and hold it for 10 years rather than a TCS?
    Did you ask yourself as to why the stock price is not going up if the company is doing so well?
    US is heading for a recession (or it might already be in one) and all of us need to see the long term and short term impact of the same.
    IT stocks shall be whacked out of shape. I am riding the downward trend in these stocks. I don’t care if TCS goes back to its IPO listing price! All we need is 1-2 bad quarters.

  4. Thursday, November 8, 2007 at 7:41 am

    Its interesting! I have 84 shares of TCS at IPO. TCS is a fundamentally sound company and its going to grow at least 20 percent every year. They have to innovate. They have enough cash to leverage a big buy out. Of course it may not happen too. but if i have a horizon of 10 years, do u still exit? and invest in something that gives u bettter returns for maybe the next 2 years?

  5. seriouspranav
    Wednesday, November 7, 2007 at 9:53 pm

    i totally agree with you on this one too!

    people must get out of INFY and TCS atleast now and switch to the uptrending stocks!

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