Long Term & Short Term Market Trends & Investing Strategies.

15 Jul

Posted by Shyam as Opinions

Its time of the year when we all sit back and look at our investing strategies given the current market situation. Markets have fallen a lot from the peaks of 21000 in Jan. And some choppy days are ahead too. Crude oil prices and US recession playing major roles here. We saw the crude oil appreciating from 100$/barrel and now close to $150/barrel levels. This has a very bad impact on the world economy in general.

The Indian Govt was forced to raise the petrol prices and we are seeing its impact on the inflation which has already touched 11.89% and Barclays capital even expecting it to touch 17% by Sept. Lets now look at last weeks markets and plan our strategies from here on. Because you should never try and time the markets. Markets had closed almost flat over the last week, thanks to the Friday’s fall.

Some of the gainers included ACC(up 13.7 %),Hindalco,M&M,DLF,SBI, Ambuja cement, HDFC bank,HUL gained in the range of 6-12% over the week in sensex. Some non sensex stocks which made smart gains include Media Video Limited(MVL)( up 47%),GSS america,Jai corp,Mundra Port,SEL manufacturing, IFCI,kotak Mahindra Bank,BPCL gained around 12% to 40%.

The sensex laggards were like TCS,RIL,Infosys,ICICI,Satyam,HDFC,Wipro etc which fell in between 1.5% to 4.5%. In non sensex stocks Niraj cements,Anu”s Lab,I flex solutions,Tata power,Punj Lloyd,Baja Hindustan etc.

Intermediate Trend:The recent downfall which started on May 5 finally ended when markets hit the year’s low of 12,823 points with a loss of nearly 4,900 points or 28%. In intermediate term we will see a lot of volatility in the markets, crude oil being the biggest concern.

Long-Term Trend: The markets have fallen below the intermediate tops and bottoms,which indicates a major bear down trends. It clearly shows that we are still in a bear phase of the markets. Now this is going to change if the markets reach and sustain itself over 17,700 levels and Nifty above 5,300 levels.They are all the last intermediate top levels. Dow will enter into a bull phase if it closes above its intermediate top of 13,200 levels.

Trading And Investment Strategies: The Dow need to consistently close above 11,550 to start a intermediate uptrend. You need to wait and watch till the markets bottom out to make fresh long term investments. In short term enter into stocks which have fallen and started the uptrend.IT stocks will still touch some more lows in coming days. Interest sensitive stocks need to be traded cautiously. Always keep an eye on news and triggers like share buy backs etc and take over issues. So lets hope things do settle so that we enter a intermediate uptrend soon,provided the major world markets support it.