Home > NIFTY Strategy > Market correction – Buy on dips or exit?

Market correction – Buy on dips or exit?

Saturday, August 8, 2009 Leave a comment Go to comments
NIFTY Analysis

NIFTY Analysis

Markets have been volatile in the last week with a strong downward bias. As written last week, one bout of profit booking was expected once we crossed 4700. This is the precise reason why I had advised caution in the short term. Markets never move in a straight one. Imagine where would NIFTY be if it moved up 1-2% everyday!

The correction was primarily on account of too much intraday trading happenning in the markets. The markets will do everything to trick these intraday traders who are in search of easy money. This is the prime reason why I am not a big advocate of intraday trading.It should be adopted by people who are used to taking 100 decisions in a day and accepting that 30-40 of those decisions can be wrong.

Coming back to the market trend. In my opinion, things looks still okay as we are still above the 4400 levels on the NIFTY. Next week might see resumption of uptrend supported by favourable global cues. I also see a fair degree of scepticism built in the market which might be good for the markets to move up. Just in case markets don’t move up despite all the good cues, we should also turn into a sceptic!

So what to buy and what to sell? Oil and gas (especially Reliance Inds) showed some good moves last week. I expect the strength in crude oil and RIL to continue. Another space to look at is metals. Does anybody remember Hindalco? The stock looks good for resurgence and might be a good pick for short to medium term traders.

Power stocks like PTC,Power Grid,REC etc might also be in action because of NHPC IPO and the lisiting of Adani IPO. So keep an eye on this sector.I will try to analyse some of these stocks.

Auto Stocks (Maruti, Hero Honda) that have corrected a lot are also good candidates for buy on dips. The only negative against them might be the rising fuel price.

My hectic travel has prevented me from posting too often. Things should get more regular in a month or so.

So keep a clear mind and have a clear strategy. And finally execute that! let’s not try to predict these markets on a daily basis. That is the only way to ride out the rough weather .

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  1. Meera
    Sunday, August 9, 2009 at 5:19 pm

    Is it a right time to buy the shares, If yes which sector & which company for medium term gain.

    Thanks
    Meera

  2. Rahul Singh
    Sunday, August 9, 2009 at 4:14 pm

    Thanks to you I booked 40-50% of my profits.Waiting for next move.Very informative blog!

  3. Siddharth
    Saturday, August 8, 2009 at 8:45 pm

    Dear Sagecapital,

    Just a token of appriciation, that your postings are worth reading and following. Finally have read what makes a lot of sense and if you could just advise me on the portfolio that I have.

    Rpower 360
    Guj NRE 800
    IKF Tech 1000
    Spicejet 500
    Sahara Housing 20
    HDIL 100
    Unitech 200
    Aban 10
    GTL Infra 200

    I have these at 50% higher prices that they quote today and particularly Guj NRE is at 150+.

    An advise would be appriciated.

    Thanks and Regards,

    Siddharth

    • sagecapital
      Sunday, August 9, 2009 at 12:17 pm

      I’d just give you a general suggestion- Use this rally to get out of your losers. As every bull market has its heroes, last time’s winners might not be big winners this time. I used to be negative on Infosys/Cipla in 2007 but I am positive on the same Infosys/Cipla in 2009.

      In future be careful about holding stocks like sahara housing, spicejet,unitech etc. for long term. These are good for spectacular gains in the short to medium term. In the long term, stick to companies that have quality management.So even if you are stuck in Infosys or Wipro, you have atleast some hope of recovery. With a stock like IKF, you don’t even know what the business is up to!
      I will try to analyse some of the stocks like Rpower and Aban soon. Both of these stocks are currently rangebound.

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