At this level of sensex, one needs to invest very cautiously, even if it means not earning money. Losses, at this level can be enormous, especially for those who invest in MidCaps or Small Caps for better returns in short term.

 

However, despite my cautious note on present level of sensex, markets are likely to witness new levels today because good news simply can not stop pouring in.

 First Fed Rate Cut: Yesterday, the Dow Jones industrial average gained more than 130 points on the day after Federal Reserve assuaged some of investors' fears about a sinking economy, stating that risks to the financial markets from the summer's credit crises have eased.  This rate cut is much better than widely anticipated quarter-point rate cut. The fed funds rate now stands at 4.50 percent. Yesterday, in US markets, the Dow, which had dipped briefly into negative territory after the decision, rose 137.54, or 1 percent, to 13,930.01. Broader stock indicators also advanced. The Standard & Poor's 500 index rose 18.36, or 1.20 percent, to 1,549.38, and the Nasdaq composite index rose 42.41, or 1.51 percent, to 2,859.12. 

Overseas markets closed mostly higher ahead of the Fed's decision. Britain's FTSE 100 rose 0.94 percent, Germany's DAX index added 0.52, and France's CAC-40 gained 0.76 percent. Japan's Nikkei stock average rose 0.52 percent

 

Second The statements from left side yesterday are more than heartening which suggest there is no threat to the government and the government would last full term.

 

So, look for happy investing day as the markets are likely to open strong. However, markets may witness profit booking during the day.

 

It is repetition here, that avoid midcaps and stay invested in stocks as Reliance, ICICI, Maruti, Suzlon, L&T etc