11 Month Update

My last interim update of May 20 has captured most of the up move. The euphoria of the newly elected govt. is still there but most importantly there is lot of liquidity on the sidelines. Even if the euphoria dies down in the next 2-3 months the liquidity might not. Remember Mr. Market is a “manic-depressive” beast. In Oct and Mar it was in its depressive phase and now its in its manic phase. This phase might push the sensex up to 16-17K in the short term. The valuations of blue chips are already far ahead of their earnings for this year. Is that to say that markets will crash to 10K levels? Not likely but a decent correction of 15-20% is always on the cards. I personally feel too much is being made out of the UPA govt.’s ability to deliver. Remember the congress still follows a “socialistic” policy and Trinamul and DMK are as bad or good as the left. There are already rumblings of not so good times to come for Mr. Singh.
The real economy is still struggling. Exports are in terrible shape and auto sales are again slowing. Monsoons are a bit delayed. If all the negatives come together , I will be a happy man as I can bring out my shopping bag again. There are still quite a few mid-caps available at decent valuations but I would prefer to wait. This year MIGHT just be the year when the monsoons play truant after almost 6-7 great years.
Budget , 1st quarter earnings and monsoons should be out of the way by July end so I would wait and watch for the moment.
This time is also good to check the passive income coming in the form of dividends.

Note – my value picks are beating the index by a whopping 45% and if you had invested X amount on Jan 25th, now you would be sitting on 2X+! It might not be a bad idea to book some of the profits in companies where you have made more than 80-100%! Remember unlike the US , Indian stock markets are a high beta market and you have to book profits once in a while. Please also understand that this is a virtual portfolio without any actual money being invested. I myself have not done as well as my virtual portfolio.