“Don't Fall in Love at 18,.... 000” 12 th October ,2007

“Don't Fall in Love at 18,.... 000” 12 th October ,2007
Indian economy is in teenage , as sensex crossed the teenage figure of 18000 couple of days back , my firm belief is that economy and the equity markets are just entered the teenage. If we look back exactly a year back in the month of October 2006 , markets were just recovering from the May crash the prognosis to the market was trivial . Sensex got corrected nearly 30% from 12800 to a level of 8000 , where as mid cap and small cap got battered nearly 40 and 60 percent respectively .It took four months to the market to come out from the bearish lull mode. People were skeptic about the equity market in India exactly one year back , but October 2007 is complete reversal for October 2006. Indian economy is growing @ 9% , when any economy is growing at this pace you will witness transformation from unorganized sector to the organized sector,this organized sectors are increasing the opportunities in the economy .which also enhances the corporate governance practices .Thanks to RBI for curbing the inflation to the historical lows. In a growing economy like India always there will be the best opportunities well managed companies to invest , we need not have to repent. Time and again Indian markets were proven resilient and resurgent markets . So what ahead of 18000 is every one's question " I still believe the best times in the market yet to come.
In the short term liquidity is taking away the market , valuation are looking stretched in the Indian contest and the sentiment is neutral . Euphoria and over exuberance in the market are leading the sensex. As the equity market runs on complex of factors any negative news trigger in these factors will have a immediate impact on the market .Liquidity is coming from the different pockets , if any one from these pockets desires to take the advantage of this situation take some profit from table also impacts the prevailing trend. Stock markets are human institutions they will respond to the greed and fear in the market .Be stock specific if u believe valuation are stretched right now the best way is to reap the abundant harvest. Currently i suggest the investors to be on cash for a while, i love to see sesex at above 18000 but the pace market is moving is not convincing to me , the last one week move in the market is irrational only 6 scrips from the sensex are contributed more than 60% of the move . any sensitive jitters and information in the entire equity universe will have immediate impact on the market . at the current levels at least 10 to 12 percent correction in the market will be healthy to the market and some consolidation is required .Going ahead the 2nd quarter results , RBI `s move regarding the interest rates ,political situations plays the major role ,avoid technology prefer the stocks from banking , telecom , and auto sectors .