i agree with market bear completely.there is some limited definite downside to RIL , now that it has fallen 6.9% in a day.This market is going nowhere in the short term, unless oil prices retract for sure, and this we cant say for sure, till end of 08, most likely.
Looking into last weeks recovery , where bluechip stocks shot up from 10-20% in a day itself, no analyst worth his salt would call it a recovery..only a euphoristic short covering, and come to face it, we are faced with plenty of such short coverings in the coming few months..fundamentals not working in this scenario..a cautious veiw would certainly help..one can look at short rallies in frontline stocks, which can be utlised to book profits on every rise, and thus cover losses..lets face it , majority of investors would have faced losses in this scenario..and fii's ..they're booking profits so heavily..as an example..the day after sensex went up 800+ points on the UPA govt bounce back, there was a fall triggered by heavy,heavy profit booking..pointer of what the sentiments are among the fii's.
last month was a super duper month for derivatives/futures where shorting calls gave wind fall profits..but now, there is more volatility, where one day sensex up, the next day down..unpredictable..meaning far greater risk in futures..dont the fii's realise this? after all that's where the majority of the money is! No wonder there is heavy profit booking in the cash segment! and right now, MFs are only fence sitters, watching and picking up select stocks selectively..no better example to this than that Reliance MF , the largest in terms of purchasing power, is sitting on a mind boggling 47% cash now!
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The case of reliance industries stock perse is a peculiar case now..especially in this sort of a market when no stock however fundamentally strong,can be considered perfectly safe..for sure, reliance is a benchmark of the sensex, and holds 16.5% weightage on it.Fundamentally, the among the strongest of all..But now that bears are in such a strong position as to bring down such strong counters
(6.9% fall in a single day for RIL? the unthinkable can possible happen too..), it is better for short term players to tread with caution here, as the results of RIL too have been below expectations..
Also, FII holding is above 24% in RIL, and once the market starts to tank, and all round panic starts to set in , then one could possibly see heavy selling in RIL, which could lead to a 20% fall or so..probable, cant be ruled out. But on the other hand,it always recovers swiftly in a bounce. So long term , there is nothing wrong at all with it..Short term, well...one needs to be cautious, as no stock is safe in this kind of a scenario..( double whammies of oil and inflation are still not to be ruled out,market has proved beyond doubt to be vulnerable to these twin negatives)..
In this scenario then, where to park one's hard earned money..answer would again be in stocks like L&T, Sesa Goa,SBI,HDFC,BHEL,GMDC, RIL etc for a start..thankfully we have bonus declared on sesa & L&T..Great results, 1:1 bonus in both, plus demerger news in L&T..these are the reasons, thankfully that these two are holding strong.. grab these two bluechip gems if short term profit needs to be made safely.


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