India Stock Market: Managing Risk

The problems and bail-out of Citigroup (C) is another bad development - more government resources are gone. Grim reality is becoming clearer and clearer. Sell every rally, while you analyze and pick companies for the long term. Time is on the side of buyers: use the time and take the time.

Today (Monday) I sold December 2700 calls at Rs 225. I am now short November 2600 calls at Rs 150 and December 2700 calls at Rs 225. With the volatility still in the eighties it made sense to sell the December calls now into a market rally this morning; I was going to roll the short November call on the 27th anyway. I will buy the November call during the inevitable pull-back.

From the price action in the Real Estate sector the depth of problem is coming to the surface. The longer the Goverment delays in acting on policy rates, the deeper will be the crisis. A liquidity event in Real Estate is now becoming an almost certainty, the question is which company and is it only one?

Stay tuned.

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