Rajesh Abraham: Bearish, bullish and now just sheepish

MY WEEK

Bear hug, bloodbath, mayhem... I knew I'd have to use these words this week. It is a crucial week for the markets "" things are not exactly looking rosy and it may all go out of control. The new animal (or beast?) called the sub-prime is mauling the markets. Cues from the US, where the Dow recovered 213 points on Friday after the Fed added another $38 billion to calm the credit markets, are not bad. Most of the Asian markets too opened in the 'green' early today. As expected, Indian markets too ended the day higher. We had predicted choppy days ahead for the week, and it was indeed choppy "" but most traders seemed to be staying on the sidelines. It still looks grim, given that the Federal Reserve is pumping more to calm the credit markets. Will it get worse tomorrow?

WEDNESDAY

Markets across Asia are falling. Thankfully, we are not trading "" it's Independence Day! But no freedom from a devil which was supposed to be somewhere in the oblivion "" 'yen carry trade' is staging a comeback. What else to do but avoid predicting a 'sell-off' on Thursday and play safe by writing 'a challenging session ahead.' One cannot always be right in predicting about the markets. Who, for instance, could have thought that the Sensex would cross the 15,000-mark when it was just around the 3,000-odd levels in mid-2003? But that's not stopping Tata Mutual Fund's Ved Prakash Chaturvedi from telling me that we'll see the Sensex touch the one-lakh mark in our lifetime. "I'm on record," he says.

THURSDAY

Investors are fleeing from stocks. Markets all over Asia are tanking. India is not spared either. No takers for the 9 per cent GDP growth or India Inc's robust earnings or our high domestic consumption. Make no mistake, global liquidity "" the single most important factor that propelled the Sensex to high levels "" is drying up. FIIs' net sale crosses $2 billion this month and the markets are going for a toss. Still, you know that things are not as bad as last May. Small investors are not part of this rally "" they had faced the brunt of the last crash during May-June 2006, when the markets fell by nearly 30 per cent in two-three weeks' time. Nevertheless, our headline screamed BLOODBATH. I keep my fingers crossed...what will happen tomorrow? Mayhem?

FRIDAY

The markets opened weak before falling by over 500 points "" the Sensex has dropped below 14k. But it has rebounded by more than 200 points from the day's low on short-covering. Are we in for a long bear-hug or is it just a temporary correction? Most brokerage houses we have spoken to predict the 16k-mark by December. That's about a 14 per cent gain in just over four months. Time to buy then?

ALSO...

People do make big money in falling markets, perhaps faster than when they are rising. While the big bulls are always in the media limelight in India, the bears never come out of their caves. Jesse Livermore, the legendary Wall Street trader, made a fortune in the crash of 1907. Later, he sold the market short before the crash of 1929 and entered the Great Depression with $100 million in cash. So then, who are the Livermores of our markets?