A case for bulls

“It's far better to buy a wonderful company at a fair price than a fair company at a wonderful price.”
                                                             - Warren Buffett

By Haresh Soneji, research analyst at CNBC-TV18

The headline says it all. Things seem to be in the upbeat mood. Most pockets of the economy seem to be firing on all engines, the consumer appears to be back, earnings for the September ’09 quarter looked up and the equity market doesn’t seem to be looking weary – though in the previous few sessions volatility has been the name of the game.

It’s amazing how things can change over a couple of weeks. This column a couple of weeks back (http://www.moneycontrol.com/news/cnbc-tv18-analyst-markets/buy-hold-or-sell_420691.html) advised investors to sell for the short term. But, that was then – two weeks back. The long term small retail investor could have spotted some right stocks to safely lock some capital (though this column continues to advise that investing is a full time profession and is best left to professionals). Not that professionals don’t make mistakes. Everybody is the student of the market. The best of managers could be wrong big time. Well, that’s equity market for you.

It’s not completely the fault of professionals. Allow me to explain with example from this very own column. On March 13, this column (http://www.moneycontrol.com/news/market-outlook/its-all-over_388853.html) was terribly wrong. The column though pointed that market could well bottom out, news flows and other trends in the market could weight large on the market. So, signals can be quite contradictory. As you can see, we have had the bets pullbacks in the shortest time, a feat never witnessed in the Indian equity market.

Having said that, the earnings season provided some cheer to the equity market. While the overall numbers did look positive, the Big Boys reported numbers lower than the Universe (CNBC TV18 analysed 1,952 companies ex-oil, trading and financials). The next two quarters from here are bound to show some amazing YoY performance – most of it due to base effect. December 08 was the worst quarter in terms or PAT growth for India Inc.

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