Indian Stocks: Predictable behavior, Redux

Thursday, December 04, 2008

As discussed this morning, expectations that Government is about to act on the Economic front has lifted the stock market.

So, I have now sold the Nifty Dec 2800 Call at Rs 125....recall I bought back the short Dec 2700 call this morning at Rs 125. Now the risk profile is a steep incline between 2600 and 2900; zero risk below 2600 and above 2900.

And we are up over 8% on the portfolio since November 1, 2008. Be disciplined with risk....I expect volatility to shoot up again. Analysts, traders and talking heads will dissect the Government actions...they will be falling over each other to give rosy outlooks for their pet stock or sector. This will create confusion...and then an overshoot with the inevitable return to reality.

Globally, the economic contraction is intensifying. The financial crisis has sent icy tendrils through corporations....first there was a period of job lay-offs are starting...expect heavy job losses in the developed world from January 2009 onwards...India will not be immune. Local subsidiaries of Global corporations were geared to double digit growth...with zero to negative revenue growth there will be shocks to the system.

Continue to be Risk-averse.

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1 Post Comments:

Anonymous said...

U are rite Indians cannot be isolated.
Things are getting bad in India Inc already....
Lets wait till december 12 ....The October iip numbers are out and then ????? Negative IIP Numbers....

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