Monday, January 21, 2008

bloodbath on dalal street: bloody monday

jan 21st, 2008

the sensex is down about 8% or 1,400 points to the 17,800 level. worst 1-day drop in nominal terms, but exceeded previously in % terms, i think.

i think it's pretty sad, but a well-deserved correction. the sensex should be at around 15,000 based on fundamentals (P/Es) as well as the threat of a recession in the US. 21,000 was just nuts. having said this, i asked my broker to buy a couple of mutual funds. i am not too keen on buying stocks in india directly, personally, so i stick with mutual funds and ETFs.

i am thinking the 0.75% drop in US rates has already been factored in, and all the gloom and doom over the weekend followed by the martin luther king jr birthday closure of the NY exchanges spooked everyone. i think it will go down to about 16,000 before recovering.

i am finding that my US stocks have taken a beating; fortunately, in india i had booked some profits some time ago anticipating corrections.

long term, india's stock markets are where the action will be. i'd suggest some passive investments in index funds and ETFs (they exist, but are few in number). gold (ETFs) are probably a good safe haven too. (NOTE: caveat emptor. i am not responsible in any way if you follow my ideas. i explicitly disclaim all responsibility, as these are just my amateur opinions.)

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