Samvat 2066: Return of the Bull Run!

We are in Samvat 2066 as per the Indian Calender. Diwali is an auspicious time for the investor community to  take stock of the past performance and analyse of the future of the markets. I am sure most of you must have made substantial gains during the past year, had you kept your cool during the turbulent times when the markets were down in the dumps. For me also it has been a very satisfying year as far as 'Wealth Creation' is concerned. If I go back to history, I recall the gloom of last Diwali when most investors felt that everything is lost. This Diwali has given most of them enough reasons to smile. Before I go on to a detailed prognosis of Samvat 2066, I would like to recall my perceptions about Samvat 2065, posted on my blog on 27th October 2008. I was pretty hopeful of a decent recovery at that time, but the stock markets have moved far ahead of my reasonable expectations.

It is time to analyse what lies ahead during SAMVAT 2066:

• Technical Factors: The water shed event for sustained market uptrend was the installation of a stable Govt. in India during May 2009. Markets which were in a bottoming out situation at that time, got the trigger to move into a new orbit by the declaration of election results. The gap created in May 2009 between 12500-14000 on the Sensex and correspondingly 3800-4200 on the Nifty will technically act as a strong base going forward. Technically, the markets are ripe for a strong correction before the end of calender year 2009, considering the sharp upswing witnessed since July 2009. Whenever markets move closer to the upper end of the range suggested, investors must buy strongly for the long term. Thereafter, markets are poised to retest the earlier top of 21000 on the Sensex by Diwali next year. We have to keep our fingers crossed to see whether it happens or not.
• Fundamental Analysis: The factors that favour the 'Return of the Bull Run' are a stable economic scenario, low interest rates with moderate inflation, a strong currency. So far the Govt. has given enough indications of a fast track reform process coupled with strategic dis-investment. Interest rate scenario is favourable for higher economic activity, but inflation is a bit of concern. The way India has tackled global recession has been appreciated by international community. The strength of the Ruppe is an indication the FII's are positive on the Indian economy. Although the valuations of most of the frontline companies look stretched at the moment, the growth in profits during 2010-11 will ensure that valuations become attractive in the second half of FY 2010-11. Indian economy's massive push towards sustainable growth will be trigerred by the hosting of Common Wealth games in Delhi during October 2010.
• Astro Analysis: Based on the views of renouned astrologers, markets are poised to regain their glory after a brief period of correction during Oct-Nov 2009 and January 2010. Bejan Daruwalla has forcasted a market range of 13200-18500 for the Sensex for Samvat 2066.

Considering all the above factors I feel that investors are in for some good times during Samvat 2066. But making money this year may not be easy, because the frontline stocks are looking a bit stretched on valuations. Rather it would be a year of the Midcap stocks, provided you are able to identify the right stocks after careful analysis of their underlying strength. Specific sectors that are likely to outshine are those which focus on the domestic growth story: Retail, Pharma & Healthcare, FMCG, Media, PSU Banks, Hotels & Tourism. There is no doubt in my mind that the 'Mother of all Bull Runs' has arrived. Stay invested, add on declines to profit from the India growth story for the next 3-5 years.