Where is the Market headed?

India Infoline News Service | Mumbai |

The Market seems to be struggling for direction in the last few days. There are some talking about the road beyond 5000+ on the Nifty, while others seem to think the rally is nearing a dead-end for now (one predicted this scenario in the lift this morning).

Where do I stand? Let me state a few of my concerns:
  • Poor monsoon

  • Fiscal deficit situation

  • Excess paper supply

  • Monetary position to tighten soon (May be from December or January)

  • Valuations are not supportive

This makes me uncomfortable at current levels. But having said that, one must not forget that liquidity is the life blood of the market and there’s ample of it for now.

Therefore, my sense is that the market (Nifty @ 4623 currently) may not rise more than 5-7% but will not fall hugely either, for the time being. Two things will happen: One, money will move out of one sector and into others, and two, non-index (ie non Nifty & Sensex) stocks will outperform their larger peers.

My advice to conclude: Buy on dips.

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