Nearing 17K-A Bullish Trend

At 16,741 the Sensex lies sixty points away from hitting sixteen thousand eight hundred. We are likely to see 16,800 sometime tomorrow. The level could have been easily breached today but no trading took place on the BSE since the markets were closed on account of Eid. The rally on the Indian markets has been tremendous since the month of May. Even September so far has not spooked the markets. More importantly we are a few sessions away from reaching the 17K level.

The rapid rise of the Sensex has been baffling but no one should complain because a Bull Run is a good thing.

The pessimistic outlook for the world has now changed. Needless to say the worst is over. In theory this was supposed to be the stage when the markets were to tread cautiously and stay consolidated and range bound for some time.

But here in India the Sensex is just four thousand points away from its all time high of 21K.

There is one very clear aspect of this rise in the Sensex. For certain I don’t know where the money is coming from. I can try and attribute it to the FII’s but the quantum of cash they’re pouring into the markets does not justify the market rise and therefore I am pretty sure I would not be totally correct on that front.

Domestic Funds might have some role and even local investors but since we can’t be sure about it we’ll try not to answer the question.

But we can say this with some conviction-India is clearly outperforming the West. The Dow Jones is not spooking the Sensex and like earlier when the Dow fell, the Sensex too fell and vice versa the same is not happening.

If you are a small investor and have held on to your stocks when the others around you were dumping theirs in a bid to cut the losses investors the world over started to suffer since the crash of Lehman Brothers, then this is probably the market’s way of rewarding your conviction.

No one I’ve heard from has been able to call this rally correctly. From a short term perspective it is really difficult as of now to predict the next move and since everyone is cautious the trend seems to be continuing since no one wants to make a move.

Are we then in a bubble? Since a majority of the investors are cautious at this stage that would imply NO.

From one side commodity prices being stable helps the Indian market and the slight recovery of the monsoon has ensured that the second cycle of crops will not be in vain like the first cycle.

Inflation has turned positive but food inflation is still high. The market has tried to discount all of these reasons, so for right now the trend remains-which is bullish.

A small investor must watch the current market closely. If you’ve set price targets then track your stocks like a hawk.

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