India Stocks: Gap down, Back to Value?

Thursday, November 20, 2008

The World Equity markets are 6% closer to zero....that is one way to look at the carnage globally.  Or, World equity markets are slowly entering a Value zone.

Since I believe in the latter, I am acting  on my convictions:

  1. I covered my short Nifty 2800 Call at Rs 18.  Recall I had sold it for Rs 112.  Indian Stock Market:  Volatility exploding....Sell it
  2.  Second, I added another 11% to my long equity position at Nifty 2510...So, net of the Call premium I have allocated 20% to equities at an average of Nifty 2582.
  3. Net of my gains on buying and selling ONGC and ICICI banks, my average is 2436. Indian Equities: Bear Trap in all its Glory , India: Market is sharply...Be careful
Every sector is getting pummeled.   Let us see if the official agencies can be pro rather than reactive.  Get ahead of the not let confidence erode further.  A self-reinforcing cycle can set in and reduce the impact of official action.

I have one other piece of advise for not worry about the currency in the short term.  Defending a currency has been a losing and very expensive proposition in the last two decades.  Conserve reserves.  You will need them.

A liquidity event is becoming more, and more likely.

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