gfiles magazine

May 12, 2014

Let’s wait for the good days

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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