Are you trying to predict the mkts' next move?
In this issue:
» Is market weakness a sign of things to come?
» SEBI frowns on leveraged derivatives
» Banks keen on small-town India
» Companies having second thoughts on IPO plans
» ...and more!!
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In our view, it is extremely difficult to accurately predict stock market movements. The system is too complex and the interactions too unpredictable for anyone to gaze into the crystal ball and prophesize the future. An unexpected move like China hiking bank reserve requirements or Obama curbing the risk taking at banks cannot be foreseen. What investors can do, is to study companies for the value they are getting. Then they can compare it with the price the market is asking them to pay. They should avoid an expensive deal, even if there are rosy projections. When we look around for companies on a case to case basis, we do not like most of the deals being offered.
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Source: Economic outlook for FY10, Economic Advisory Council
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As he says, "When the bank itself is a 'customer', i.e., it is trading for its own account, it will almost inevitably find itself, consciously or inadvertently, acting at cross purposes to the interests of an unrelated commercial customer of a bank."
So how does he think this conflict of interest can be eliminated? By preventing commercial banks backed by US government deposit insurance from taking undue risks.
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However, a recent move by the RBI has provided a welcome opportunity to foreign banks. With the idea of encouraging banks to open branches in under-banked areas, RBI recently allowed domestic banks to open branches in Tier-III to Tier-VI cities without prior approval. What's more, foreign banks are also being encouraged to open shop in under-banked areas. It however, remains to be seen, how these banks scale up. After all, these areas are underdeveloped with few opportunities for corporate banking and much of the population having small incomes.
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04:51 | Today's investing mantra |
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8 Responses to "Are you trying to predict the mkts' next move?"
Onil N.Parekh
Feb 3, 2010It is intresting. Very fine analysis. Advances increased at very low rate & inflation is on high side.
It may turn in to "MANDI".
C.R.Padmanabhan
Feb 3, 2010Until the market exhibits a sustained upward momentum and retains the gains for 4-5 days, profit booking will continue resulting in oscillation of indices. This means 300-350 points gain in the sensex could be wiped out fully or partrially, the next trading day. Small investors also have become wiser by booking profit, wherever they find it, without waiting for higher profits.
N K BHAT
Feb 3, 2010My observatiojn is that there is a strong correlation between sensex and crude price in international market.
Will you please confirm this by giving a graphical movement of the ratio of sensex / market price of crude per barrel in Rupees over the last 8 years?
The findings may be quite enlightening.
Prasad VSK
Feb 3, 2010Thanks for such wonderful advise. Now I realise I am getting correct investment advise, unlike all the recommendations floating around. How fortunate I am for having subscribed to Hidden Treasure.
Mahesh Dodeja
Feb 3, 2010Well the market needs to rise a little bit if it crosses 5000 by tommorow with higher volumes then we can say that the market will rise till 5095 the if the market does cross 5100 then a further move can be predicted. Since a lot of IPO's are under way we need to be careful of the bubble that might be build up....
K G Rao
Feb 4, 2010Surely Mr. Kamal nath is not, as u hv called him, Minister of Commerce?