Monday morning witnessed unusual opening drama in Indian Capital Market. Saturday, when the election results were announced, India Inc. expected that SENSEX may gain by 800 points. But beyond their expectations, the SENSEX went up by 2110.79 points (17.34%) and touched 14284.21 and Nifty went up by 17.74% and touched 4323.15. Consequently both the markets were closed for the day for the rest of the day at 10.30 am since the 20% circuit breaker level prescribed by SEBi was crossed. The sentiments played heavily because of the overwhelming victory achieved by the UPA at the Centre and the assurance that the government lead by Dr. Manmohan Singh would continue to rule India. Market were also relieved when the results that the Leftists could play no role in reform process and Dr.Singh will have free hand to re-shape the economy. This became a great solace to the investors. Hopefully demand for shares increased heavily, but those who were holding the scrips were not ready to part with it hoping to reap a higher profit expecting a further upward rally. This sentiment, tough not permanent, is not expected to melt down overnight. If the sentiments sustains and FIIs become more vigorously active in the mrket, I feel that the SENSEX may touch even 18000 and Nifty may cross 4600 by this weak end . Hence I am of the view that it is better to book the profit and take a new position. Since the market is expected to be volatile in the coming days, keeping a long position will be too risky. If the market goes up as expected the Mutual Funds may be able to offer a better NAV and it is advisable to redeem the MFs as and when the NAV crosses the break-even level. Following over-sentiments will not be advisable at this moment.
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