play straight

I’ll be frank with you. I have been expecting the market to bottom out from around 3000 level of the Nifty. I have been proved wrong. The market is like a mad elephant which is uncontrollable when it is mating. The panic in the market had taken the Nifty to sub 2600 levels during intra-day trading on 27th Oct before bouncing back to 2650 level at close. It is good to look at indices for gauging market sentiment at a given point in time but when it comes to analysing valuations of individual stocks, one can get stocks at more or less same levels (plus or minus 5 per cent) for an index movement of 100 or 200 points unless it is a high beta stock- which simply put a stock which rises or falls more than proportion to the corresponding rise or fall of index.

I am convinced that buying now should be rewarding irrespective of what the Nifty does. You never know it may sink to 2000 level but a high beta stock gives you opportunities to cash in on the way up, like it happened on 28th, Diwali Moorat session. One stock which bounced back sharply was UTV Software, a leading media player. Believe it or not, this stock had touched a low of Rs 405 the previous day before closing at Rs 450. Next day at the Moorat session, when sentiment improved with positive cues from all major markets, UTV spurted to a high of Rs 595 before closing at Rs 564. If this isn’t opportunity what is?

The bottomline: Pick your stock with some effort and then stick to it with conviction. You will have no regrets. But remember, we are in difficult times. Curb your greed and sell if you have made 40-50 per cent on your short term investments. You may get more if you are lucky or less if you are unlucky. But you’ll learn a lot on how to trade for profit.