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Market Outlook

Sunday, December 20, 2009 Leave a comment Go to comments

Last week has been very hectic for me and I have not been able to write much. The markets have also played some tricks in my absence. The much anticipated 5200 was never crossed and now we are staring at 4900!

This poses the big question- Should one book profits now or will the uptrend resume?

As the markets have gone sideways, it is usually very difficult to get a handle on the next moves. The best strategy in such conditions is to reduce your risk exposure and stay in atleast 50% cash if you are a short term trader. This is just following the old saying – ” When in doubt, stay out. ”

Also I am finding more and more sectors falling out of favour with the bulls. Right now only IT and Pharma are still carrying this bull market on its shoulders. Oil, telecom,capital goods,banks,auto etc are slowly falling out of favour with the bulls. There  is stock specific activity still happening in this sideways market. We did pick some stocks that have rocketed by 40-50% in last 1 month but that cannot be said about the overall market.

Although, in my short term portfolio I am still playing  for the Oct-Jan bull phenomenon but with a much reduced exposure. That will make sure that even if I am wrong, I don’t lose much. One can increase the exposures once markets show some signs of getting past 5200. Also, I am focussing a lot on small and midcap space in search of  momentum. I can still find couple of  ideas in that space that can rocket in next month or two.

As far as long term is concerned, this market is still in an uptrend. 4500 is a good base for this market and might provide good entry point for the long term players if markets correct. 4900 and 4700 are other supports for this market on the downside.

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