Samvat 2067: The charge of the 'Bull'

We are in Samvat 2067 of the Indian calender which commenced on 16th March 2010. However, stock market traders view Diwali as the start of the new Samvat. Diwali is the time to review the performance of the stock market for the past one year. The year gone by has been an eventful year for the stock markets, and the new Samvat 2067 has commenced on a positive note with the BSE Sensex scaling a new closing high of 21004 at the close of the 'Muhurat' trading on 5th November. Before we proceed to analyse the year ahead, I would like to recall my observations on Samvat 2066, put up on my blog on October 18 2009, under the caption: 'Samvat 2066: Return of the Bull Run!'. I had written: 

• 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.
• The growth in profits during 2010-11 will ensure that valuations become attractive in the second half of FY 2010-11
• 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.

However, I must admit that I was hopeful of a 5-10% correction during the middle of the year which never occurred, leading to a sustained bull run to the previous highs of 21000 on the Sensex (6300 on Nifty), achieved on Diwali day. Now for the crystal gazing for 'Samvat 2067':

• I would like to re-iterate that the 'Mother of Bull Runs' is on. 
• Technically, supported by the massive liquidity overhang, the markets are still in an uptrend. A strong base seems to have been created around the 5600 levels on the Nifty, which should hold as the base in the next correction, whenever it occurs.
• Fundamentally, the performance of companies has been reasonably good. The stretched valuations at this juncture would seem justified if inflation is tamed by the end of FY 10-11.
• Astrologically, according to eminent astrologer Bejan Daruwalla, Samvat 2067 will be excellent for the Indian economy and our markets. Barring a downturn from January 2011- May 2011, markets will be in the grip of bulls.

Considering the above facts, most market analysts are hopeful of Nifty scaling 7000 levels by next Diwali, which is a reasonable expectation. I am sanguine that this target is likely to be achieved by next Diwali. But given the risk-reward ratio for equity investment, a 10-11% yearly return is not the risk worth taking. Therefore, new investments should be undertaken only after a 5-10% correction from the current levels. The second important factor for taking advantage of the next up move in the markets would be the identification of right sectors. My sector bets for Samvat 2067 would be: Tourism & Hotels, Aviation, Auto motives, Paper products, Media & Entertainment, Health care.

Wishing you all a Happy Diwali and Happy Samvat 2067.