Just another day- Firing, Blasts, Few killed, few injured

Even as I write this post, reports of terrorist attacks in Mumbai are coming from new areas. Of course, TV channels are having a field day beaming human tragedy with amazing enthusiasm. And yes we will have routine rhetoric from our politicians about such acts not being tolerated. But in end everything will be forgotten.

Now please don’t get me wrong- I am not blaming our police or politicians. The fact remains that men in uniform have risked their lives to bring situation under control when we all (less a unlucky few) are safely home and praying for well-being of our relatives. However there are thing about which police cant do anything. I am certainly not indicating that we should ignore basic security. The truth is that we need to value human life more. Of course we do have a large population and human life is cheap here. But that’s true only in purely economic sense. Acts of terrorism have much deeper impact on an society than simple loss of productive manpower. Safety and security are basic requirements of economic growth and terrorism can bring even strongest economies on its knees. It is time we take security seriously. Today even our busiest buildings lack a basic metal scanner. Aren’t we inviting attacks?

However, there is more to the story than what meets the eye. As a newly independent nation we have done amazing well to have avoided disintegration. The risk is we have started taking our nation’s unity for granted. While we do have political and geographical unity, there is hardly any trace of religious and economic amalgamation. As long as we are not able to bring economically marginalized citizens to enjoy the “shining India” there will be disrest. It is time we understood we cannot have a peaceful Mumbai as long as people go to bed Hungary in hinterlands. In all likelihood money spent to eliminate poverty and hunger will be as effective against terrorism as money used to buy latest arms for our forces. We will do well to listen to the warning signs before it is too late.

Catching a falling knife

Finally, Indian stock markets did correct themselves- unfortunately the correction is looking more and more like a reversal every day. The first sign appeared when the expected “correction” did not halt at 16000. Not only that, sensex has already made three successive lower lows after the peak. So technically we are certainly in a major downtrend rather than a correction.Sensex has already breached previous top near 15700. naturally now the question is where are we headed?

If you exited as suggested in previous blog, you have done wonderfully well catching almost a peak. What if you are still holding on to your losses? The first thing to do would be acceept that we have missed the peak now and it is wise to exit immidiatedly than to lose more money.

The question today is not weather the sensex will fall further, but the question is how far it will fall? Although many are betting on 15000 support, I would say that the first strong support remains at 14500-14000 reagion. Looks like the last two days rally is just a correction to the fall and should be used as exit option rather than to fool ourselves that the worst is over.

Given that that the valuations are looking much more reasonable today that few weeks back, I would tend to take 135000 as a good buying opportunity. But if that breaks than the focus shifts first to 12500 minor support and then to, well, 9000. That’s as pessimistic as it goes. I would personally buy at 14000, then at 12500 and then sell like hell and run for life! After all we are trying to catch a falling knife. Of course some people will always play russion roullette and enjoy rich returns if they turn out to be lucky. But that doesn’t make it a reasonable risk to take.