India: Market is up sharply...Be Careful

Friday, October 31, 2008

After selling net Rs. 1,306cr on October 29, 2008 FII's came back to buy Rs 1,237cr today, October 31. The net result was:

Sensex close 9,788 up 7.4%, Nifty close 2,885 up 7.0%.

The funds have managed to create a better looking NAV for month-end, but nothing has changed. We are still in a de-leveraging environment; redemptions will continue despite the games being played with month end figures.

Bear markets have vicious rallies; these are wonderful traps. Don't get caught. Use these rallies to exit and be ready for a lower risk environment; hoard your cash.

The only two companies I have bought when the market was 2550 and am holding for long term:

ONGC at Rs 550, ICICI Bank at Rs 330 (p/e 10)

In both cases, a few years forward, it will be hard to imagine that price was at these levels.
I continue to be on the sidelines..and although I may put 5% of capital to work at these levels, I will avoid real estate and may be interesting
In both cases, we will see my buy-in prices or lower before spring 2009...

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