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Stocks

Riding The Wave

The wave has just begun. The market is up nearly 6 days in a row and at this time, both the Nifty and the Sensex are reaching their highs. I think they’ll cross it comfortably.

But the factors that are negative: The subprime crisis hitting funds and banks in the US, it’s effect on Indian stocks – both tech that outsource from them and others that have LIBOR linked loans, the high interest rates in India, the price meltdowns in real estate, the dollan-yen-rupee equation; all of these are short term negative, and probably even long term negative, but they still continue to exist.

This is the beginning of the bubble. Doesn’t mean I’ll quit. I’m riding the wave – I’ve bought a large number of momentum stocks with a simple funda: a 10% trailing stop loss and a “ride the wave” concept.

I bought NIIT technologies on Friday, at 307. It has moved up considerably in the last few days and today it’s already up to 347.

Another stock I picked up was Kamat Hotels. I own it for a few days now, and I bought it simply because it made an FCCB earlier – bonds that it issued to expand. The P/E of 10 and the mid-level hospitality sector attracts me for the long term – I believe with new highways these guys are the ones that will make big money over the next 10 years. Yet, I saw a momentum play in the stock as well – and bought some more shares to ride this wave. I bought on Friday at 155, and it’s at 170. My stop loss is my buy price.

At this point, for a wave riding exercise, there are a huge number of stocks available. But it’s all risky – I’m taking a measured outlook. If you want to do so please embrace the risk first.

Note: Before every steep fall in the market, there has been a euphoric rise. I believe this is that rise for us. If we go up hard, we will fall hard. I’m not sitting on the sidelines – no, that is giving up too much of this opportunity. I’m just giving myself a 10% cushion.

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