Time to sit back and evaluate the opportunities

I think currently our market is in its highest entropy state which (if I remember my thermodynamics fundaes correctly) stands for a state of total madness. Otherwise how can one describe a 10% fall in CNX Nifty Index on one day and then an equally strong 10% bounce back on the very next day. On last Thursday we witnessed one more session of complete bloodbath on dalal street and as soon as the pundits started saying that we are in bear market, we have breached the 200 EMA levels and hence the markets will fall further, and what not, we had a great comeback on Friday. Bulls were back in action with equal vengeance on Friday. Friday witnessed one of the strongest rallies we have seen in recent times. As any techincal analyst would say, it was mainly a techinal pull back as on Thursday our market ventured into the oversold terrioty.

The global picture still remains mirky and the nebulous environment of interest rate hikes across the globe will not allow equity markets to settle down in near term. RBI's rate hike on repo and reverse repo rate on Thurday will act as the last nail in the coffin of already struggling equity markets.

The way the market cracked in the later part of the day is really a matter of concern. Just at the moment when we were about to come into green the utter lack of buying and large short selling by institutional investors pulled the market down heavily. Huge selling pressure was evident across all the sectors and especially banking as all sectoral indices lost more than 3 to 4 % each. So all in all it was once again a painful session for dalal street with nearly no place to hide from the carnage. Our markets are particularly vulnerable to more correction as even after this correction, most of the analysts believe that our market is still overvalued. So some more pain is clearly there in the system and it is better to be on sideline for the moment rather than to try and bottom fish etc. So let the market setlle down and in the meantime evaluate the good companies ideas which are now available at great prices.

Quote : "The fact that people will be full of greed, fear or folly is predictable. The sequence is not predictable." -- Warren Buffet