Don't throw caution to the winds; Play with its direction ….

Take Advantage by buying growth stocks

The title looks slight less horrific as the global markets staged a smart recovery rally on the back of announcement by the Feb and other major central banks across the world to pump in obscene amount of liquidity in the financial markets across the globe. The global markets rallied anywhere between 4 to 18% on Friday. The U.S. which is the mother of all financial markets started interfering in the free market mechanism by banning the short selling in around 800 financial stocks. No wonder the stockprices rose as there was no one to sell and those who were short had to rush to cover up. This fired the U.S. financial sector stocks anywhere from 20 to 40% on Friday and thus giving a soothing effect to the already battered investors.

FINANCIAL TEMPLESS OF THE GLOBE BANKRUPT.

The destruction path started from the Subprime mess, then the fallout of Bear Stearns and Freddie Mac & Fannie Mae carried forward by Lehman, Merrill Lynch and AIG . It turned out to be the biggest nightmare for US and Global Markets. Seeing the U.S. financial powerhouses falling like mine pins, sent shivers down the spine of World markets as they collapsed one after another just like in a serial bomb blast.

Finally on 18th September 2008, the Fed decided enough was enough and along with ECB and other major Central Banks across the world decided to pump in unheard amount of liquidity overnight and this sparked a major rally across the globe.

Lehman collapsed, Merrill Lynch sold, AIG in crisis

Lehman Brothers is one of the biggest US investment banks. On 14th September 2008, the investment bank announced that it would file for liquidation after huge losses in the mortgage market and a loss of investor confidence crippled Lehman's slow collapse began as the mortgage market crisis unfolded in the summer of 2007, when its sotck began a steady fall from a peak of $82 a share. The fears were based on the fact that the firm was a major player in for subprime mortgages. Initially they were unable to find the buyers but at last they won federal court approval to sell its North American business to London-based Barclays Plc for $1.75 billion.

Merrill Lynch managed to get some rescue as it found the buyer in bank of America. Bank of America Corp's $50 billion acquisition of Merrill Lynch also creates the biggest bank in the U.S.

Shares of American International Group, once the world's largest insurer by market value, plunged 51 percent to $5.92. The company made an unprecedented request to the Federal Reserve for $40 billion in short-term financing.

If this massive destruction rally would not have stopped by the joint efforts of the Central banks of the World than it would have left deep scars on the face of world economies. Already impacted the economies in the below mentioned factors:

Liquidity in the market -If liquidity get dried it will start creating the pressure on demand side and direct impact will be on the growth pace.

Unemployment figure - due to this the jobless numbers will increase and which will make this scenario gloomier.

Institutions linked with collapsed organizations - Those institutions which have business chains have got deeply damaged because of these losses

JOINING HANDS UNITEDLY TO FACE THE CRISIS

The European Central Bank (ECB) pumped $40 billion into distressed money markets in its latest attempt together with other central banks to provide desperately needed liquidity. On the other hand, three-day loans by the ECB were issued in a quick tender that saw very strong demand as banks desperately seek trusted money to fulfill their funding requirements.

The Bank of England on Friday allocated $40 billion, while the Bank of Japan provided three trillion yen ($28.3 billion). the other major move by the Feb was to Ban the Shorting of over 600 financial stock futures. This resulted in a major global rally in which Russia went up by astonishing 20%, followed by Hong Kong & China up by nearly 10% and the European markets too were up by 6 to 9%.

TECHNICAL OVER VIEW OF THE MARKET. As on September 19, Friday when the Sensex closed at the 14042 levels and Nifty closed the week at 4245. What can be described as most volatile week in the recent history, the markets gyrated between extremely oversold levels to recent pull back levels. One good thing I would like to add out here is that as the market crashed it took support just before the previous bottom of sensex 12514 and Nifty 3790. the market after taking support rallied, thus the levels of 12514 and 3790 for the Sensex and Nifty assumes tremendous significance. Since last January our market has entered in to bear phase According to the DowTheory bulls and bear phase passes from three trends Primary trend, secondary or intermediate trend and last trend minor trend. right now our market is in the minor trend of bear phase. Minor trend is most painful and fullof panic. As the market sentiments become extremely negative nobody dares to invest in this kind of market. But one should crefully note that the early Bulls get activated and start collecting their stocks, when they are still in the oversold zone. The primary trend of the Bull run and minor trend of the Bear phase overlaps. Definitely it requires a brave heart to take positions in such a panicking market but history of stock market suggest that those who dare to invest in such market normally end up as a winner. So i suggest my readers that they should take the benefit of oversold market and gradually start taking up positions in to the market. Take benefit of oversold market & Participate in the new world rally. This liquidity pumped into the global markets had temporarily brought an end to the gloomy scenario and ended the present correction. So for the short term it can be taken as a good time to enter the market to take the benefit of the world rally. So Investors should not be distracted by the short term volatility and should not lose sight of the bigger picture of the Indian economy and the Indian companies. Take advantage by buying Growth stocks, which are available at extremely reasonably valuations with a view of two year