Markets all set to retest lows

The upmoves are coming when least expected and downmoves are strong and severe wiping off the gains made in no time. . .and it does not look good. I had in my post yesterday that charts are pointing that some indicators are positive yet I would not advocate F&O position as the downmoves are very swift. . .now the realty has hit us. . . all this while the rally was looking very very unconvincing, and now all that has ended. . . the sharp downmove today is a precursor for worse things to come. . . I wont be surprised if we break the all time lows set in October. Now I would basically look at 2550 on the NIFTY and 8000-8500 on the sensex. . .if that breaks then NIFTY can be headed much much lower. . . I am also stuck with some cash positions but its not too much of a worry as these are cash positions so one can hold on. . . this was the precise reason why I was not venturing into going long on the futures ( though I covered my shorts a bit too early :( )

Well lets hope for the best, but very frankly there is nothing to look forward to . . . hmmmexcept gold obviously :) ( Do read up my article on gold, i wrote on Jan 31. 

Markets Rally, treading with Caution

OUTLOOK: CAUTIOUSLY POSITIVE

The rise in the markets has come as relief to many, and surprise to some (including me...)! The surprise has come as the outlook for the world economy is bleak and any rally at this point makes little sense. However something interesting seems to have happened. . . whereas the world markets continue their journey downwards with Dow breaking the 8000 barrier on the downside, our markets rallied!!! Does this mean we have started to decouple from the world markets? Cant really say but it will happen one day for sure, with enough money coming from domestic market rather than FII's. However I am not too sure whether that is going to happen in the near future. . .

So where do we go from here. The technicals have become positive. . .so its time to be long. . .but I have one fear, the markets when they head down they come down with heavy force, so I am not fully convinced with taking positions in F&O. Hence it might not be a bad idea to play little by little in the cash market for a 20-30% kind of a trade, with some good stocks. Yesterday I bought some TISCO, RELCAP, GE SHIPPING for a 20% kind of a trade. . .lets see. . .but one will have to be nimble footed if and when the markets trace back. . .till then enjoy the ride I guess. . .

Gold a viable asset class. . . To outperform

Now with the US facing its worst economic problem since 1929 or perhaps worse of all time, it is important to note certain things:

1) US economy is the world economy's engine of growth if it stops then world economy stops to grow. . .

2) Not only US but Europe are in deep trouble. . . and Japan has been in a trouble now for 30 years that makes it worlds top economies in trouble all at the same time. . . this is not good news.

3) The banking and financial industry have collapsed in the west, this has never happened before as earlier there were industries that went bust but never the support for these industries i.e. Finance industry itself. . .

So what lies in store moving ahead. . . Governments all over the world are using the available options to them, namely on the fiscal front by creating newer projects and secondly on the monetary front by printing in more money . . . and printing in more than ever before. . .not exactly knowing what the impact of printing money is going to be in the long term and worse not knowing whether printing money would finish this crisis in the first place. . .However what this printing is leading to is lot of side effects associated with them. . .One for starters that we see is currencies of these countries heading southwards. . .U.K being one prime example wherein a pound has touched an all time low and in my opinion should fall even more. . .

Currently we are insulated from the monster called inflation as commodity prices have crumbled due to recessionary fears and fall in demand, however with so much money going into the system, inflation might come back with full force (not necessarily in India though, as we have been cautious in our money printing). Also major economies do not have too much flexibility with respect to the interest rates are currently the interest rates worldwide already are near zero (India again stands to gain again as we still have lot of space to maneuver on the interest rates). With so much money sloshed into the system, countries would tend to focus on 'real assets' or gold standard. Gold would tend to outperform, with more and more money getting printed in the system. The first signs of this are already visible with gold touching unprecendented heights lsat week. . . Hence when rejigging ones portfolio it is important that due attention is given to gold . . .