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US Markets down 3%, but don't panic

The DOW is down 3%, or 344 points, in a pretty lousy day. The rupee is trading at 44.55 and looking weak. Inflation was declared at 12.34% – a very high value, which will definitely be #1 on the list of to-do’s of the new RBI governor today.

The outlook is weak, and while we may open lower, I have a strong feeling we’ll cover the gap very fast. If that happens, all bets are off, and we could have an immediate bear market rally that takes us above 4600. So don’t panic.

Note however that as my longer term goal is down – this is just a trading note for today. I think our series of bad news is yet to come – on inflation post rupee depreciation, on a complete destruction of the growth story post diwali. I would not be long the Bank Index at this point. (Pharma yes, FMCG selectively, Auto perhaps, and it seems to be a good time to go long IT, but I’m still waiting)

Is it time to set up a short? I don’t know – but I think today will determine it. If so, you’ll see some entries in the Short Only strategy, for sure.

  • kanagala says:

    >Hi Deepak,
    What is your advise for long term investors? Do you think it is better to wait for some more time before committing money.

  • BRS says:

    >A basic question: what does “go long” and “go short” mean? Can you please clarify with example. Thanks.

  • amit says:

    >Happy teachers day sir,today i have completed almost a year learning from you through your blogs,i have always had the good luck for having very good teachers at all stages of my life in various field,and you are my Financial teacher,we may be of same age but then in “Guru-shishya” relationship that never matters.

    You have taught how to be practical in the markets,your analysis of the market direction may be determined by certain parameters,but the way in which you explain it here on the blog is exceptional,for e.g on present condition of real state sector you have taken the case of empty malls.That is true,that is what i feel when i go inside a mall,that how these guys sustain therein opening a shop which clocks a sale of less than maybe 5000/- a day,it is all driven by glamour or may be the owners have enough money not to care for,but till when.

    Same is the story of Residential flats in NCR,to own a livable 3 bedroom flat in a decent locality you need to have ~50 lakhs.Now myself being from a business family i can always hope to get 20 lakhs from my father,being in a good software job i can afford to take a loan of 30 lakhs but then i end up paying loans for rest of my life and that too 30k per month for the next 20 years.That is scary.I am better off in a 10500k monthly 3 bedroom rented flat in a plush locality.

    All in all i can connect to all your thoughts and analysis and sir thanks for sharing your views and teachings and that too selflessly.

    Happy teachers day,
    Best Regards,

  • Vikram says:

    >Hi Deepak

    I have been an avid reader of ur blog for over a year. And I have noticed you’ve moved on from personal-finance related blogs to technical-analyst related blogs. While I do appreciate that your blogs have become very sophisticated, it has not been informative the way it used to be. Still, all the same I appreciate and respect ur opinions, so plz continue blogging.
    I have started investing in liquid funds and gold etfs. Stock market is not stable even if ur a fundamental analyst. Sp plz give suggestions for semi-stock savvy guys.