TIME TO EXIT EQUITY
MARKETS
Vishnu.S.Jarugumilli
www.crorepatihomes.net
firstcapital@rediffmail.com
This is in continuation of our writing on stock markets on this forum.
About a month back we advised “Wait and Watch” mode for planning equity purchases. Much water has flown in the Cauvery since then and most of it not suitable for human consumption.
Let us look at the overwhelming negatives at this point. Inflation at 11.05%, crude not coming down below 130$, Asian markets plunging, FII withdrawals continuing in the Indian markets, US investment banks still writing off bad loans, political uncertainty regarding the nuclear deal, Manmohan threatening to resign, left contemplating a pull out, interest rate hike on the cards, disappointing industrial production numbers and many more.
What are the positives? NONE. OK, what may turn out to be positive? May be Q1 results will be OK, may be crude will cool down a bit. Nothing else among the above mentioned NEGATIVES will correct in a hurry.
To find some silver lining, let us look at individual sectors. Here too there are only dark clouds. Here is how individual sectors look on the charts. IT (already at peak valuations), auto and banking (facing vicious macro environment) capital goods (OK for the medium term but negative in the short term) real estate (down in the dumps) and steel, cement and sugar (expected govt intervention will spoil these)
So what does all this mean? For me in one sentence – EXIT THE STOCK MARKETS NOW. You can buy later at much better prices. When is that “later”? No one knows. Let us wait and watch.