Investments:- Beginning to descend

Only yesterday I posted my views on the need for the markets to breath a bit and wow…what a drop we had today. I hope that this is just the beginning of a meaningful and much needed correction. Having said that I do not advocate major drops consistently in order to have a correction.

I am still waiting for few more percentage points drop before I could think of picking some stocks for me. What will be the reaction to this drop from the people, who are waiting in the sidelines with spare cash? Are they going to jump in after seeing the drop today? I wouldn’t. I expect the PSU-Factor to dominate the markets in the second half. And this would make the Fund Managers and other Cash-rich investors, waiting on the sidelines, to wait a little longer, atleast until some news on the PSU leaks out.

The PSUs disinvested by the Government, so far, forms around 30% of the total market cap and are doing well in the market. If and when the government begin to disinvest the other PSUs, investors would be eager to get a chunk of it. It would be interesting to see which PSUs they start with. Some of the PSUs like NHPC, RITES and OIL India have got the approvals and can be put out for listing anytime.

The timing of the IPOs are going to be crucial. With Markets up for the last 13 weeks, the Mood of the investors would be up-beat now and would suggest a high risk-taking appetite from them. Today’s drop would have encouraged long-term believers but surely caused some discomfort for the Traders and Jobers. Though many of them might have made good profits for the year, It would be interesting to know how many of them really managed to erase the losses of the previous year. Is there enough capital available with Investors, both institutional and retail, to subscribe for the PSU shares? Right now, I wouldn’t believe so. So, I think the Government might take some time before they actually list it.

I would love to get shares of some of the PSUs. Some of them are doing well and some of them are likely to do well, once it is made public, with better professional management and answerability.

I am keen on the long-term prospects of the Indian Market. On the short-term, I am planning to wait a bit longer and allow the correction to go through. Even if it means missing the bus now, I think I will get my chance to get into the PSUs and make it up. I only hope that we do not have bigger drops frequently in the name of Profit-taking. This would bring down the sentiments once again and might create a bit of panic. I would expect a nice and smooth descend to reasonable levels before taking off on a wonderful long journey. This will be more healthier for the market.

Disclaimer: All information and views posted by me in the blog are solely my views and opinions and do not necessarily reflect the truth or the real situation. The material and information contained on this post is provided for pleasure reading only. You are requested to consult your Financial Advisers before making any Investment related decisions. I do not recommend or suggest any investment decisions for any of the readers of this blog. I therefore do not accept liability for any loss one might incur, by taking decisions based on my posts.