STOCK DOCTOR
dr gs sood
THE market
may not be able to post any major gains post-May 16 since it has
already factored in the formation of an NDA government though it may
still have some upside if the NDA gets a clear majority. But a knee-jerk
steep correction is waiting to happen if the NDA gets barely past 200
and is stranded somewhere around 200-225 seats. The Sensex, at the
current PE of more than 19, is trading at a slightly higher level than
the 10-year historic average of around 18.5. Macros have improved
considerably and there is more stability around the world. Flows into
emerging markets have improved, giving them the taste of a bull market
amidst a scenario of high inflation and low growth where small investors
are sceptic and domestic financial institutions are turning net
sellers. This may partly be due to the lack of faith market players have
in the projections made by opinion polls —a case of once bitten twice
shy, and here in fact twice bitten since the projections were way off
the mark in both the previous polls of 2004 and 2009. Any shortfall in
the NDA’s clear majority is likely to substantially dilute its policy
stance... Read more
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