Punters, Hunters and Bear-men

After the knee-jerk reaction from the Indian Stock Markets after the Budget announcements, there seem to be a floor laid down at 13000 levels. With the liquidity running high in the market over the last 5 days, I think the Hunters are out there grabbing value stocks.

It looks like the Funds which are in the sidelines waiting to be deployed have gradually started to come into the markets. This is good news for the markets. When the Hunters come in, they come in force and sweep the punters and the Bear-men. This was evident in the last 3 sessions of the Indian Stock market.

You should understand how these Punters, Hunters and Bear-men operate, terms which I generally use. The Punters ride the sentiments and take positions in the direction in which the markets are heading. Some of them might argue that they follow the Technical Analysis but still most of them fall in the “buy on the rumor sell on the news” category.

The Hunters are the real long-term investors. They look only at the valuations and P/E Expansions. They are not perturbed at the short term reactions of the markets. Their decisions are influenced by policy changes, valuations, market behavior at critical exit points and availability of replacement investment opportunities.

The Bear-men look at over valued stocks and short sell them. Of late, the Bear-men have lost control of their principles and have started selling short every time the markets headed north.

Though the market is a place for different type of Investors, namely, Punters, Hunters and Bear-men, it is often seen that only one of them can be a dominant force in the market at any given point of time. Each one respects the other and waits until the one in the centre has completed his run. The Markets change trend when more than one category tries to occupy the floor. Major trends are set in the market whenever the Hunters participate in the Market.

In a typical bull market, the hunters get in and put a floor and build positions. The Punters take over and move the markets higher. In a typical bear run, the Bear-men start selling the over valued stocks followed by the Punters. When the stocks reach a certain level, the Hunters (if they believe the Bear-men story) start selling their positions. Normally after the Hunters start selling, the Bear-men work overtime, unchallenged, obviously, followed by Punters.

Right now I think the Hunters might have finished their jobs leaving way for Punters to speculate.

It has been a good run in the recent sessions and I think it would make sense for us to see some extra fat being trimmed off after the Punters try to breach the pre-budget highs of the market. Once the euphoria of the earnings season is over, dietary programs will start in the markets and some fat will be burnt. Only then the long-term health of the Market will be good.

When everyone thinks that the market is going to go high, I am always worried. Probably that is when I would like to book some profits. This is what I have read and that is what I would like to practice as well.

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.