Random Observations (DEEPAK SINGH)

It feels like Bull market. Atleast the price on the screen suggests so. But have things changed on ground? Bears are giving an argument - nothing has changed on ground and so the optimism seems unjust. 
Well, bears are missing the point….what has changed in last couple of months - PE i.e. Perception. First, the perception changed to HOPE and after elections, it has changed to belief that India story has turned for good. Remember, market runs on belief till the reality changes it upside down.
One Technical point: Market first adjusts to new belief and then move based on reality. Market rarely gives the luxury of time and data confirmation. It first makes a move and then waits for the data. So, the argument nothing has changed on ground does not hold true. What matters: Have things changed in belief? Because that’s what matters….Remember, Traders don’t trade the market…they trade their beliefs about the market 
Top Ten countries in terms of stock market performance
BRIC countries are in top ten when it comes to 2009 performance. It clearly indicates that investors are betting on fact that emerging economies may revive much faster than developed western economies. 




FIIs booked some profit after record inflows
After a mad rush of FII inflows on Tuesday, FIIs booked some profits on Wednesday. The trading pattern clearly indicated that rush in mid-cap and small-cap was largely due to domestic retail crowd. Will FIIs join the party there? I doubt very much considering the low liquidity in those stocks

Are you getting carried away?
There are four deals which give an interesting story on how FIIs are using the rally to get out of some positions -

• Goldman Sachs sold shares of McNally Bharat Engineering;
• Morgan Stanley sold shares of Madhucon Projects;
• Citigroup sold shares of Nagarjuna Construction.
• JP Morgan sold shares in Reliance Capital

All these stocks belonging to category of engineering, financial services, infra and construction category where there has been huge rise in bullishness. Despite the selling, all these stocks managed strong gains…thanks to huge retail interest. But as the deal suggests…it never hurts to take some windfall profit. 
Most convincing bearish argument
Markets have run up too fast too soon. There’s a bit of common sense here to have a retracement. But with too many people waiting for pullback….will market oblige? A sideways action seems probable