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Trading tips to get over the market crash
Sakshi Sharma, Moneycontrol.com | September 12, 2006 08:21 IST
It has been the biggest single-day loss for the Sensex and Nifty since July 17. All the BSE sectoral indices are in the red, down over 2.5% each.
Due to sudden selling pressure on Monday the markets experienced a huge fall, bringing the Sensex down by over 350 points, and Nifty down by over 100 points.
So what trading strategies must one adopt to counter this sudden market fall? Experts give the answers.
Market expert Gul Teckchandani: One should still stick with this market
Valuations, as we all know, have been rich. But the fact is that if one looks at 07 and 08, I think the Indian economic environment looks as if it is going to hold out for the next eighteen-twenty four months in an aggressive kind of growth mode.
So logically, stock prices would look reasonable, when you look at them from that perspective. Having said that, if one is going to just run through the B-group, one will see enough value there, but one will have to stick in and see this volatility from a sentimental perspective.
There are enough opportunities in both the second-line and B-group companies
I think commodities are very difficult to predict and one has to be in there for long and effectively think of it from a three-five year perspective. But it is very difficult to predict commodities and personally, I would look at oil companies at this point in time rather than looking for these metal companies, which have had a fairly decent run or for that matter, sugar.
If one goes for individual companies and looks at the valuations there are enough opportunities in both the second-line and the B-group companies.
Technical analyst, Rajat Bose: It is too early to actually go short in the marke
I am not going short in the market. It is too early to actually go short because until last Friday the trendiness indicators were all suggesting that the uptrend is still intact.
Also, today the open interest for a number of stocks has gone down while the Nifty future open interest has gone up substantially. So this suggests that some shorts are building up and there is some long liquidation in individual stock futures.
Sumit Rohra of Antique Stock Broking: Go long on markets
Monday's market fall is attributed to the fall in Nikkei, following the huge sell-off in commodities there. Since crude is below $66 per barrel, I believe the markets will take it positively, so the market trend is still intact.
If however, the markets do open negatively tomorrow, then I feel one must go long. There will be bouts of profit booking in the markets but the Sensex is definitely headed towards 13,000 level soon.
K Ramachandran of BNP Paribas: Have a long-term outlook, refrain from making quick gains
I think one has to take a long-term view of the market, one has to take a minimum twelve-fifteen month's perspective. My own sense is that we are still in a bull market and we will probably see the bounce back happening well above the 9,875 mark, therefore the basic bull market is very much intact.
The way to approach it is to have a reasonably long-term perspective and play the long-term India equity story rather than try to trade in and make some quick gains. Therefore, one would probably see 800-1000 points correction including what one has seen today and then probably a bounce back again from those levels.
Have a twelve-fifteen months horizon rather than taking short-term bets
The market never obliges in the very short-term, so one has to really persist and take a minimum twelve-fifteen months horizon. Given that context we continue to remain bullish on Indian equities and therefore the approach should be to remain invested in this market and start looking at a set of stocks or a portfolio stocks, which are likely to outperform going forward.
So I think one has to remain invested in this market and play this market with twelve-fifteen months horizon rather than taking short-term bets.
Mihir Kothari of Motilal Oswal Securities: Positional traders should book profits
From a trading perspective we would advise positional traders to book profits in whatever else that is there. They must re-align their positions largely in the banking pack, the PSU oil packs, selective auto stocks because these are ones that are showing good amount of strength even in a market like this.
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