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Friday, February 09, 2007

INVESTMENT STRATEGY


Don't fall in love with stocks

Forfeit the game, before somebody else
Takes you out of the frame....
The pace is too fast, you just won't last

After hitting an all time high of 14723.88 during the week, the Sensex lost some steam by Friday. Rising inflation and the usual profit booking were responsible for the brakes on the bulls. Despite Friday's fall, the markets managed to post its seventh week of gains indicating that India Growth Story is still intact. However, for the short term, wild swings are expected with a flat to lower bias. The recent rally has indeed been backed by strong liquidity both from local funds and foreign players. For the coming week, we may continue to see sector specific activity as we run up to the Budget. Valentine's Day has seen new peaks in the past, not to mention the crashes after that. Remember not to fall too much in love with the stocks. Interestingly, the month of February has always seen the Sensex hitting record highs. It has already hit a peak this time with benchmark Sensex surging past the 14,700 mark to touch a lifetime high of 14,723.88. However, the road ahead won't be easy for the bulls as they have to deal with the uncertainty of the policy changes, developments and reforms in the upcoming Budget. Stay more in cash and for anything in the world, don't be over-leveraged.