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Friday, February 20, 2009

Stock Market 2009 Predictions - Where would it be in Feb-March 2009?

Looking at current stock market situations worldwide, and especially US DOW trailing below 7500, Indian stocks can not remain isolated for long time since Indian economy is too dependent on world markets. Large companies like General Motors likely to go bankrupt in US, economy there is under severe pressure and chances are it would not grow at all and infact would be contracting in future for some time.

Read: BusinessWeek Article - What If GM Did Go Bankrupt...

Let's try analyzing market trend and understand when can one buy stocks in year 2009.

Dow Jones is at 6 years low. What do you think a level for BSE SENSEX or NIFTY it could be?

DOW JONES 10 YEAR CHART (Click To Enlarge)
The global disconnect between the global macro in the US and the rest of the world is actually narrowing. That’s bad news. China and India are slowing big time. There are big stimulus packages that have been announced by every country, especially the West. But how will you find enough buyers to subscribe to those bonds? Therefore, if they don’t find enough buyers then rates will go up.” Says Shankar Sharma of First Global.

People were looking at the DOW Jones for further direction in stock markets to buy stocks. Now that DOW closed firmly below 7500 yesterday, breaching November lows, there is a high probability that global markets would follow. What does it means for Indian markets? There is possibliy of markets retasting their October lows. Most of the stock market reports are indicating the same.

After breaking 7500 levels, DOW finds its support at 6000 - 6500 levels in near future. For Dow this fall comes to 20 % and so world markets could follow the same fall in terms of percentage.

SENSEX has closed today at 8843 points. If you consider 20 % fall, it comes around 7000. October 2008 lows are also in the same range. i.e. around 7200. SENSEX has long term support between 7000 and 7300.

SENSEX 10 YEAR CHART(click to enlarge)


CHECKOUT: Interesting Analysis On BSE SENSEX

Looking at weakening world economy, the downtrend is expected to continue in first half of 2009. Then onwards economies are expected to start reviving. So if you try to project the Financial results of last quarter i.e. Q-4 2008-2009, and for Q1 of FY 2009-2010, they are going to reflect the weak economical financial conditions. And so the stock markets would reflect the same. Probability is on higher side that SENSEX could taste it's OCTOBER 2008 lows.

Enough of analysis for SENSEX targets!! What should be investor doing?

SEAT ON CASH
!!

BEST PLACE FOR YOUR CASH FOR NEXT 3 - 6 MONTHS COULD BE YOUR BANK ACCOUNT!

This is not investors market. These are traders markets.

One can think of buying stocks once the economic cues are in clear trends and it could be only after near end of first half of 2009. Meanwhile new investors can learn How to buy stocks and try finding out value stocks to accummulate. Start accumulating stocks to buy in small quantities.

Read: Stock Market in 2009 - Stocks to Buy

One should start searching for stocks to buy in 2009 - 2010, find the value stocks, make your own list of stocks to buy. You have lot of time for stock research. :)

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