18th October, 2009

It looks like the Indian stock markets are set for another booming year – Vikram Samvat 2066.

During Samvat 2065 that ended on Friday Indian financial markets saw a reversal of fortune as the Sensex scored handsome gains of 63.7 per cent.

On the last day of Samvat 2065, the Sensex jumped 120 points, which is seen as a big positive unlike previous year’s close, when the Sensex tumbled by more than 190 points.

Market participants are bullish on Samvat 2066 and expect the benchmarks to reach new peaks. Some brokers are hopeful of the Sensex reaching 28,000-30,000 levels in Samvat 2066.

Market men feel It is unlikely that there will be a major fall in the markets in the coming time, but there could be small corrections as we go  along.

There is frenzy in the market and that is the reason we are seeing that some shares rise steeply within a short duration. Global inflows into Indian markets are going to keep them buoyant in the long term, although in the short term, corrections are expected.

FII inflows and the recent bullish trend in the global markets kept the market on a firm note said Mr Vishwas Agarwal, an independent analyst. With more FII flows expected, the markets would surely be on an upwards trajectory in the coming year, he added.

Fund flows into emerging markets touched $967 million in the second week of this month – the highest in 2009 – as investors shifted focus from US equity funds to fast-growing markets, EPFR Global, a fund tracking firm, said.

The fact that the larger part of the rally in the past few months has been only due to FII flows is a cause of concern. Trend reversal would happen swiftly if there is any negative news in the global markets, said some brokers.

Mr Arun Kejriwal of KRIS said the thing for concern for Indian markets would be that the last six months rally has been due to the higher liquidity in the system. Although the positive thing is with the huge FII inflows, any kind of liquidity stops would be a major concern, he said.

Lack of buying support from the domestic institutions could pose a concern in the coming time, said some brokers.

Majority of retail investors, marketmen said, are still on the sidelines.

While retail investors might not be participating heavily in stock markets directly, they are still entering through insurance and other such products, said Mr Lalit Thakkar.

The mood is increasingly growing optimistic on the retail front, said Mr Kejriwal. More retail participation is expected in the coming year as the market is establishing an upward trend.

Many think it is unrealistic to think the Sensex would reach 30,000 just because the previous year saw huge rises but the market could go up by about 20 per cent in the coming year.