Weekly Portfolio Review: 29 January 2011

You must be feeling letdown as market continue to go down mercilessly. I am not different! The loss in BSE Sensex is 10% in the month to date which is after a lacklustre year of 2010. My month to date loss also stands at 10%.

Declining foreign direct investments (FDI), widening trade deficit, escalating inflation, and RBI increasing benchmark short term rates all added to fire. On global front, though American economy grew at faster pace in the fourth quarter of last year, the unemployment rate is increasing. In the UK, amid increasing inflation, the consumer confidence plunged the most since 1994 as per a report.

HDFC Securities, in its weekly report, states that market closed below the 200 day EMA (Exponential Moving Average) and it expects further downside in the coming week.

It is not end of the world. A long term investor would see such ups and downs from time to time. In 2009 the market gained about 100% after a loss of 52% in 2008. It was just 17% gain in 2010! For a long term investor, the downturn in the market must be seen as opportunity to enter into fundamentally sound companies.

I am not buying anything in the coming week. There are a number of good companies available at attractive valuation. However most of them are trading below their daily moving averages. My investment decisions have never been based on technical analysis. But technical trend will give an indication of good entry/exit point. Sometimes it may turn out to be a wrong decision. Nobody can predict the market and we can’t say how far it will go down!

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