i Develop Stocks Advisory

Fear Vs Bear FED decided to cut interest rate to as low as 1% whereas the whole world is acting fast on Rate cut. India is the only country where no rate has been cut so far. How far they would delay is really a matter of debate but for sure there is no choice. In order to bring back the trailing economy back on growth path interest rates, repo rates as well as crr and slr need to be cut at very rapid pace. Yesterday market regulator has allowed creeping acquisition upto 75% instead of 55% yet the limit of 5% remains which means those who have done or would like to do can’t buy more than 5%. The selling by FII’s are more than 5% in some companies and hence this limit may not work positively across the board. It may help few large cap companies like Tisco where promoters want to raise their stake beyond 55%. More actions are required on margin fronts. When the markets were going strong at 20000 the margins were raised to as high as 60% on long positions. Similarly when markets are falling and if you do not want to stop short selling then at least the margins on short positions should be 60% or more or even 100% which will deter shorts to a great extent. Today I heard few experts sharing their views on a live wire channel. One of the fund managers threw a very sarcastic comment on the host questioning his deliberate attempts of fear some bearish presentations. The host smiled and replied that it is his job to do so and if something good is required to be said then it is the job of the F M. Well, everybody knows that we all are going through very difficult time which is historically unprecedented and has happened only after 1929. But there is no point in creating more fear in already frightened small investors. It is true that there will be only one bear for every 999 bull and hence the bear phase will help only 1 out of 1000 people. It is also true that bears must be the happiest lot now. But the time can’t always remain same. We are 8000 where the 09 pe is just at 8 and hence where little head room for seeing downside on fundamentals. Off course fundamentals will not work till the time markets are governed by awesome fear, rumours spread by bears and the uncertainty with regard to global stability. The package of U S Govt could start showing impact from 1st week of Nov. Mr Bush who could be responsible for the US collapse through oil mismanagement and financial turmoil is set to be out from action from 4th Nov 2008. I firmly believe that oil will not fall below 50 usd and graph of consumption will start from that point of time. China which has halted consuming metal purposefully will start its consumption very soon as the prices have cooled off substantially. Non profitable units will close down, stronger one have already cut production which will get adjusted to the excess inventory very soon which will bring back reversal in commodity very soon. In short, the bear tamasha will come to end abruptly with all global governments have decided to act fast to arrest the recession. I wish Indian Govt too should act faster instead of taking peace meal approach. We have potential to recover much faster than the global economies. Europe has gone on record saying that India can do a major role in global economic recovery. All the best once again on this auspicious occasion of Dipawali.