Sensex

As of writing this, the Sensex is on the verge of crossing 18,000 for the second time in 3 months. It’s a surprising scenario to many because it’s a situation that was not expected. Many brokerages had gone on record to say that the Sensex would not reach this level in the current trade because the signs of a breakdown had begun to appear. Europe was and still is in the woods and the thinking was that the situation in Europe would rub off onto the other markets.

Frankly speaking, an effort to time the fall of this market has proved futile again and again. The pattern of thinking has been to anticipate a fall in the markets but as we have seen, the Sensex may tumble into a multipoint fall but does not continue the tumble but rather makes up the fall in a few sessions. Throw in a few flat sessions in between and the cycle has repeated.

But in the past few days the trading has been strong. Buying has increased which is why we stand at the threshold of 18K.

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.

We’ve been a little iffy about recommending a majority of the IPO’s to hit the Indian market in the past few months. As far as the power companies went, there wasn’t anything that interested us apart from maybe Indiabulls Power but even that was something you could have dealt with in the secondary market. This week saw the successful listing of Jubilant FoodWorks, better known as the company that runs and markets the pizza chain Domino’s Pizza in India. Now that Jubilant has listed, the IPO is a success and the rest will run from the secondary market, looking at the prospects of this company, TIS recommends a buy on Jubilant FoodWorks from a long term investor’s point of view.

The joke doing the rounds since yesterday is quite cheeky! It goes “Du-bai or not Du-bai that is the question”. Ha! Quite tongue in cheekish but appropriate all the same. When the markets open this week that’s the first question that traders and investors the world over have to answer. In a previous article posted this month titled ‘Signs Of A Correction’ , I remember ending that post with these words and I quote straight from the article “A correction around this time is likely to be a drawn out one. Price wise and time wise unless of course some big event casts its shadow and spooks the market leading to a tremendous fall.”

The events related to Dubai and the news that comes out of there this week has the potential to be that ‘Big event which spooks the market’. It’s something that can shift the Indian market from the current bullish gear to a selling, fear driven frenzy.

In the past few months a lot of opinions have been thrown around regarding the rise in the world markets. Compared to last year the markets are definitely doing better. In India the rise has been phenomenal. From March we’ve been on a very welcome Bull run. The question which has been asked for quite a while now has been “When Is This Going to End?” ,there are some traders who are ripping their hair out unable to understand what exactly is going on, according to many this is a level that both the Sensex and the Nifty should not be able to sustain.

The first impression that you might receive upon reading the title of this post would be that the writer is trying to suggest that the Indian markets are headed or heading towards a correction. A dip in the indices which have for the last six months or so stayed positively in the green are now going down into the red zone. Let me categorically say that I am not suggesting that a correction is imminent or anything like that. However based on the movement of the markets during the past few trading sessions, there is evidence to suggest that we might be moving towards a correction in the medium term.

Firstly, on behalf of theindiastreet.com I would like to wish all our readers a very happy and fun filled Diwali. We hope that the Festival of Lights and the Goddess of wealth help you to prosper and be a part of the growth that the Indian economy is witnessing.

A year ago at around the same time, I remember posting an article titled ‘A Dull Diwali Sets In’. Looking back at the Diwali of 2008, the constant theme of pessimism, the calamitous overtones of the world economy and the future of the Indian markets had seriously bummed out the millions of Indian investors. Some of the Traders on Dalal Street were not even in a half decent mood to light a firecracker during Diwali.

What a difference a year can make! The fireworks have exploded on the Sensex and the Nifty. The most hearty thing to see that the same people who were so depressed and unhappy last year are a lot more optimistic and smiling. Definitely Samvat 2066 looks a lot happier than Samvat 2065.