Monday Morning Market Musing - Bears in Control

There is an interesting story which I wanted to share with you on this Monday Morning.

Once upon a time in a village, a man appeared who announced to the villagers that he would buy monkeys for $10.00 . The villagers, seeing that there were many monkeys in the forest, went out and started catching them. The man bought thousands at $10.00. As supply started to diminish and villagers started to stop their efforts, he announced that now he would buy them at $20.00.

This renewed the efforts of the villagers and they started catching monkeys again. Soon, the supply diminished even further and people started going back to their farms. The offer rate was increased to $25.00 and the supply of monkeys became so scarce that it was an effort to even see a monkey, let alone catch it.

The man now announced that he would buy monkeys at $100.00. However, since he had to go to the city on some business, his assistant would now buy on behalf of the man.In the absence of the man, the assistant told the villagers, "Look at all the monkeys in the big cage that the man has collected. I will sell them to you at $50.00 and when the man comes back, you can sell them to him for $100.

The villagers queued up with all their savings to buy the monkeys.After that, neither the assistant nor the businessman could be found anywhere but the monkeys were everywhere!

This is what happens in our stock market if one is greedy ...............
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Our markets corrected last week and the pain has started. Why did this happen? It was due to markets being overheated and reaching milestones in quick time. I had clearly mentioned that markets should correct alteast around 18500 before proceeding further and if this does not happen we will see huge meltdown in markets. Markets raced to 19K and were zooming to 20K but then came the correction.

US markets tanked on Friday and we have seen a big fall. This will cause our markets to open in a big way down and added to this the F& O expiry is on thursday. There will be huge panic in the market today and lot of volatility will be seen.

TCS has won a big deal and so try to pick up some shares in the downtrend. It is a good opportunity to buy in the correction mode. There is no need for any hurry as you are already on the sidelines and you can still remain there for couple of days atleast before the dust settles and we will see some consolidation. Markets will eventually start the journey to 18K and then to 20K but it will take some time as strong hands will enter the market and the correction makes market healthy.