Thursday, July 19, 2007

just can't seem to get it?

Anybody following the stockmarkets for the past couple of weeks should get puzzled and have shorted it (like me), should get frustrated!! The things just aren't falling in place, but it doesn't matter, the markets are rallying and thats it.

- starting July 2 Indian stock market has rallied by 5 and a half percent.
- In this rally there have been all but two days of decline (which had a 0.25 and 0.43 percent decline.
- If we go back a little, in last month the markets have rallied by almost 10 percent (common is this Shanghai or something?)
- Not a single day of more than half a percent decline in 20 trading sessions, the highest decline is 0.46 percent.)

And all of this comes when
- most of the global markets have shown some intermediate corrections, but bulls at the Dalal street seem to be unfazed by that. Only possible exception is wall-street, which did have a hiccup or two but thats it nothing beyond that. Yeah all of this when a little over billion dollar gotten wiped out in the Bear Sterns Hedge fund, which is just the tip of the subprime iceberg. The dollar is at its weakest against Euro and pound.

- When the crude price is hovering around $75 per barrel

- When we have two successive weeks of increase in inflations. (up by almost .25 percent from its low.)

- When during the days for which I have observed, FIIs though buying in cash segments, have been in net short positions in Stocks futures and Index futures to the tune of 2000 Cr. rupees (not to mention tons of 4400 and 4300 nifty puts, which are going to go down the drain, I suppose)

- When none of the quarterly earnings being spectacular per say. (Infy disappointing, TCS goodish, HDFC okayish, Wipro poor. Only real surprise came from L&T (The stock has appreciated little over 30% already) and Ranbaxy.

- Now all of this is fairly risky, but no one knows where to find a top? The rally resembles almost a panick rally (I agree it is oxymoronic) Usually such situations arise while finding a bottom.

This looks like "someone is printing free cash" to go ahead and buy stock, the question is who? Carry Trade?

The answer just isn't there, or I can't seem to get it...... :-((

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