Bears on the Prowl - Again

After last week’s freeze on downward movement of share prices on the NSE, the bears returned in full force on 16th June. The NSE All Share Index lost 2.6% on Monday 16th June. Another 2.6% was lost on Tuesday and by Wednesday all the gains of the previous week were eroded as the Index closed 56,205, down 3.08% for the year. A year low.

Obviously the ill advised freeze of last week did not restore investor confidence. I hope the NSE DG has learnt something and will leave nature to take its course in the market.

The decline on Wednesday was a mere 1.57% which was lower than the previous two days of the week. Volume was also higher compared to the previous two days. So perhaps the worst has passed. However, Thursday is traditionally a low volume day. Consequently, we might not see any recovery until Friday.

For the long term investor, this temporary decline should not be a source of sleepless nights. We have had 8 consecutive bull years. So a bear is due. In 2005, the market returned a mere 1%. There were very good buy opportunities. GTB was one of them selling at lower than the 2004 Public Offer price. I bought it and rode it to 300% gain in less than 2 years. GTB is again selling at less than the GDR price of last year. I smell an opportunity for the long term investor.

My plan for the year was a modest 25% gain for my portfolio. However, this appears to be too aggressive considering market performance so far. I have therefore revised my goal down to 15%. Lets hope this can be achieved.

Meanwhile I await trading result of 19th June. It promises to be an interesting day.