Time for Contrarians to Walk the Talk - Sainik

When I predicted Friday, July 4, we would see a better closing for the week ended July 11, a few of my friends had smirked at me, what with all the uncertainties swirling around. A week is a long time in politics as well as markets. This weekend too, I am optimistic that we should see better days as we go ahead.

Why am I so hopeful?

Turn the clock back to January, 2008, when fund managers and analysts were united in proclaiming that we were completely decoupled from other markets and Indian markets would continue to see higher highs in 2008. The bull-bear ratio would have been 70-30.

Today I am unable to see a single commentator who is hopeful for the market for the next 6 months. The Internet has caused very rapid dissemination of information, hence every Tom, Dick and Harry is convinced that the world will collapse and India would be leading the way with Sensex targets below 10,000.

The horrendous numbers coming in are not helping the case: inflation, IIP, etc., the question on everyone's mind is: Who will dare to buy? Yet, on Friday the Nifty bounced back nearly 75 points from its low. All of this in spite of both local and foreign institutions joining the selling bandwagon, which is a rarity. This makes me suspect that the latest pack of bears are not strong enough.

Such events bring out the contrarian in me. I am too aware of the fragile nature of the financial markets, yet in my humble opinion, there has never been a better time to be a contrarian and play for about 200 points on the positive side for the Nifty.

This is a low risk play, with the stoploss being in the region of 3800 levels. I am walking the talk, by being long in the Nifty.