The markets had bottmed out at around 12,500 on the sensex. They were only waiting for the trigger to launch an upmove (or some might like to label it as a bear market rally). And not one but two positive events, that occured simultaneously, have taken the markets into a new orbit. One was the softening of crude oil and the icing on the cake was the passing of the trust vote by Manmohan Singh Govt. The markets seem to be in a hurry to reach 15,500 on the sensex, and that is likely to be acheived easily. But what after that?
We may be in for a positive surprise on the upside. But that should not be taken as as opportunity to buy into the market. The macro fundamentals do not indicate a sustained upmove. Falling oil prices and the perceived stability of the Govt. can be triggers for the bull run. But buying, if any, has to be done selectively from a long term perspective. Many speculative stocks have moved up 20-40% in a short span (a few ADAG companies do not merit such rich valuations, example RNRL). It is better to book profits here and move to frontline bluechip stocks. The result season is on, and the performance analysis should be done before buying a scrip. The sectors that look good for a further 10% upmove are Banking & finance, Oil & gas PSU's and Power equipment & power utility companies.
Those investors who have missed the bus, by not entering the markets at 13,000 levels should resist entering the market now. Because the risk-reward ratio will become less attractive with every upmove in the markets. Ultimately, ugly politics will soon raise its head to puncture the rally. Rather, it would be a good opportunity to book selective profits at the levels of 16000-16500 on the sensex and 4800-5000 on the NIFTY.
1 comment:
The markets are unpredictable, I'll rather take my profits and sit on cash till the next elections.
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