What’s got this Sensex so excited that it surged 50% from 8000 to 12000 in two months !?
Earnings ? Elections ?…..what’s so exciting ?
Nana Chudasama’s Banner on Marine Drive in Mumbai states ” EXCITING ELECTIONS…SURPRISES,SHOCKS,SUICIDES”…….Surely you don’t find Suicides exciting !
Barely had the Fifth and Final Phase of Polling closed yesterday,several Exit Polls came out fast….predictably predicting a fractured verdict…with neither UPA nor the NDA Alliance showing any significant lead….Amusingly,many Politicians,like the Communist Karat and the Samajwadi Mulayam gave sound bytes that they don’t believe in Exit Polls….The real verdict is day after tomorrow…on Saturday….when our stock markets are closed…so how will they open on Monday ?
So,what’s it going to be post Poll ?…What’s Idealogy to Opportunism ! You’re going to see blatant and pretty blunt opportunism by ALL politicians and their parties in their endeavour to be part of a governing coalition
We’re paying the Price for Capitalism…Now we will pay the Price for Democracy !….Freedom is after all our birthright !
As for our Stock Markets…I don’t want to be a rally spoiler….but I do think global and domestic economic woes remain heady….for one,just look at our balloning fiscal deficit and the balloning government borrowings to fund it….I’ve blogged these in detail earlier….the next government is surely going to be really tested in it’s decisions to stimulate our Economy….Exports and Aviation are clearing begging for sops,while Cement and Banking hold out some Hope
So,with prevailing Macros,I see a Macro Sensex Valuation range of 9000-13500 and the Nifty dancing between 2500 and 4000 for the next few months,giving Multiples of 10 to 16 on expected FY 10 EPS levels of 850-900…so in a sense,I see we are currently at 10% below the top of the range and 30% from the bottom….Now,you make the Risk Call
So in the Short Term,if you’re an addicted party animal and can’t help but party with the Sensex and Nifty ,riding the momentum with the FII Inflows of US $ Two Billion in the past two months,then make sure you leave before the party is over…Get the Drift !
And Remember…when you hear FII heads talking of Compelling valuations ,increasing risk appetite and Monies waiting on the sidelines….it’s all relative really !…I see more Momentum and Liquidity than Valuations currently…and riding these is riskier