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Markets looking Ominous…..beware the Ides of March !…Sensex down 2% and from 18000 can seek sub 16000 levels in 2011

Markets are looking increasingly ominous and  Sensex is likely to correct from 18000 + levels to be derated down to PE 14-16 range….sub 16000 possible in a few weeks…while I do remain bullish for the longer term I simply cannot ignore bearish macro indicators in the shorter term 

William Shakespeare penned this warning as a part of his play  ‘Julius Ceasar’…”Beware the Ides of March”… it is !…different RTC but I’m too issuing a caution ! 

This macro view is largely influenced by

  • Oil Prices likely to surge even further and cross US $ 150 a barrel as fears mount of ‘ No Fly Zone’ coming up in Libya,Saudi Arabia flares up even more ,Japan begins to count the tsunami losses and a growing voice against nuclear energy will increase the demand for Oil as Fuel worldwide
  • Inflation worries continue to challenge as prices of non oil commodities too show no sign of abating
  • Pressure on Interest Rates will remain and this year the rates in India will keep firming…they are kissing 10% levels already…so to take that extra risk to earn specific Equity Premium to return aggregates of 18% to 20% from Equities (anything lower is not worth it) may not be everyone’s cup of tea 
  • Geo Political Tensions mounts in the MENA Region
  • Sovereign Defaults again loom ahead in Europe 
  • FII Inflows are slowing down in 2011…on some days we actually see worrying outflows

Would be wise as a tactical strategy to reduce Equity Exposure and Weightage in Portfolios unless you have a three year outlook and are willing to ignore any possible corrections in 2011….clearly do not expect Equity to perform or outperform in 2011 as Corporate Earnings too will be under pressure

…..Gold and Oil has surged 28% in the last year while silver has simply doubled !…as Investors continue to seek the safety of bullion over Equities,Properties,Risky Debt and Volatile Currencies 

Traders and Speculators bewarned in Equities Spot and Derivatives….Fortune reversals are almost daily…and the Sensex and Nifty are likely to slap you…hard at times ! 

Bottom Up Stock Equity Stock Selections is the way forward to beat benchmarks….You’ll need some sound advice for this…and the temperament and conviction to invest in these selections…..Staying in the safety of Large Caps has not really been rewarding…Larsen has sunk sub Rs 1600 from Rs 2200 levels……there is more relative safety in going for Zero or Low Debt Companies available at a Price below Book Values with most assets realisable at these Book values or more….however such a tactical selection strategy will skew your Equity Portfolio from Core to other segments


2 thoughts on “Markets looking Ominous…..beware the Ides of March !…Sensex down 2% and from 18000 can seek sub 16000 levels in 2011”

  1. Hi Gaurav … I have been waiting for the Sensex to come down since I read this blog … and it never came down… Could you please indicate some short term trends? .. Can I enter on Dips?

    By the way … I am eagerly waiting for your other “J” announcement .. 😉

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