A mystery called Market...

A mystery called Market...

Indian market index breached all the levels in the recent time. 50% - 100% gain over 2-3 month in the stocks have been very normal news. When I started inveting in stocks two years back, IT stocks rallied like anything. Then service industries had good run up. Power sector picked up next, later commodity stocks picked up thanks to the lined up news of Gold, Zinc, Copper, Alum. touching new highs, increasing demand of Sugar gloabally and Kenyan drought.

But at any point of time, there is no end to the madness of people. We witnessed mad rush to the stocks over the past 2 years whenever there are news related to any industry. People bought as if there were no tomorrow. Same madness continued in the last 1.5 week also; but rush is at the selling counter.

In the last 2 years, i have seen two big corrections to the market. First, when the BJP govt. thrown out of power and second, this week in the backdrop of LME(London Metal Exchange) price fall. During the first fall i didn't feel the effect since i had no great position in the market. This time i could realize the rush and effect. I had positions in two stocks which were speculative buy. One got sold when the SL price is triggered. Another one holds on. All other stocks were value buy. I added more of the value stocks to average out.

In the mid of the day, i just called a friend in a broking firm. We talked about the correction and their broking firm view. He told another big borking firm predicts postive direction of SENSEX after 2 o clock. I didn't pay much attention to this prediction. Surprisingly market turned +ve after 2 o clock.

WheneverI came across this kind of prediction and happening, my belief of retail investors are the prey to FII (foreign Institutaional Investors) and HNI(High Networth Individual) is getting stronger . There are lot manipulation happening behind the screen. People seemed benefit right after the news like commodities touching new high, cement price are roofing and surging of global sugar demand. People, including me, invested on the wave of momentum seemed like intelligent investors. These biggies smartly offload chunk of thier positions at the peak price. When the news is negative, thru' media and broking firms, news spread in a matter of seconds, panic button pressed, ending up most of the stocks locked in the lower circuit. After few days of LC, people will get time to sell their stock after most their profit or capital got eroded. These big guys wait for cheaper price and getting back to their position on the stock.

So what would be the solution/safe guard to this problem?

The good, old idea of being less greedy. One more suggestion we can add, in Rakesh Jhunjunwala term, is Long Term Greedy. So applying less greedy to the trading and speculative stocks and Long term greedy for the value stock will save the investors from losing their shirt in the volatile market.