Market Analysis : Toward And Beyond 18,000

In an article a few months ago here on The India Street, I had pointed out as to how the 17,000 level on the Sensex had become like an electric fence. A market barrier that was seen as a warning. Investors were not confident enough to believe that it was a fundamental thing . Like many we too believed that a correction was due around this level. Though some bearish traders did go a step ahead and went on to suggest that in light of the recentness of the global economic situation, our own Sensex reaching the 17,000 level was a case of the market being overbought and many scrips being overvalued.

For us to personally believe that the market was not overbought, it was necessary to see that this level could sustain for a long time. Over time as we now see this has happened and 17,000 is no longer an electric fence.

The Sensex has crossed this level and as of today’s closing is just 50+ points away from reaching 18,000.

Because a base has been formed around the 17,500 level we are inclined to say that we like the way the market is behaving. Investors have not panicked and have with time grown more confident to put their money into the markets which has eventually led to the Sensex a stone’s throw away for 18k.

But the flipside is that the market here has not been tested. We’ve not exactly ridden on a wave of great news. However, the market has not also been fed with bad news leading to panic .In such a case the upward trend has remained.

Asia too on the whole has done well, maybe apart from hitches in Japan so there really has been no reason for India to not have followed suit.

Unless there is some big news that impacts us in a big way leading to the present optimism to be replaced by fear and panic, we are likely to retain this greenish trend.

That said I don’t expect wild multi point rallies every single trading session. It’s always hard to predict what happens next but I will fall back on the fact that we like the way the market has been behaving. It’s not extremely indulgent or overly optimistic. Neither is it pessimistic. It can best be described as being cautiously optimistic.

Though we do add the pinch of salt here again that this too can change especially since we’re reaching a case of more buying as indicated on the Sensex and the Nifty.

In the short term, if you are a trader then you can take heart from the fact that for now the trend is green even if volumes are not rampant. Volatility is less.

However for the long term investor, continue to be watchful.

[Disclaimer: Investing in Stock Markets involves a person taking a considerable amount of risk. The above article is only of an advisory nature. Statements related to companies and businesses have been made on past performances and do not necessarily indicate their future behavior because economies and markets are of an uncertain nature. The writer of this article may or may not hold the above mentioned stocks in his personal portfolio. Neither the writer nor the site can be held responsible for any action(s) of the reader based on this article.]