Monday, May 4, 2009

Are we heading towards another bull run?

By: Subhadeep Bhattacharjee

For a share investor in the Indian market the last one month has been encouraging. After months and months of losses which saw crores go down the drain the markets seems to be finally looking north. Many investors who had burnt their fingers with declining stock prices all throughout 2008 are again ready to put their money in the market but with some caution off course.

In the first month of the current financial year 2009-10 the BSE index has gained close to 17.5% and is up from 9708 in March end to 11403 at the end of April. The NSE's Nifty wasn't too far behind gaining 454 points in April to close it 3474 registering a growth of more than 15% from 3020 where it closed on the 31st of March. Now this growth will surely bring back some confidence among the investors towards the market.

The first one hour of trading in April the BSE index shot up by more than 500 points. This is a great sign considering in the backdrop there is a huge political uncertainty looming over the nation. Although the IMF (International Monetary Fund) has predicted the global slowdown to last a little longer Indian markets have shown positive signs in the last two months. A seasoned economist will tell you stock market and economy don't always correlate.

Now is the big question is, whether this is the start of another bull run in Indian? Crossing the 12000 mark in the first trading day of April has come as a huge psychological factor. The 15% growth in one month might well be a price correction but under no circumstance is this a 'bear market' figure. Touching the magical 21000 mark might be a distant dreams but a 5-7% growth is on the cards for the next few moths. The markets are bound to stabilise in the coming months between 13000-15000 mark provided the a unthinkable political coalition doesn't take command of the country.

Many analysts feel that the worst may be over for the Indian markets although the recession is not nearing its end soon. One of the reasons for the Indian markets doing well is because of the foreign investment. For a global investor India is still one of the safest bets. GDP under all circumstance will grow by over 6% this year which might sound a distant dream for many other countries in the ongoing recession.

The month of May and June will be very crucial for the Indian markets. Since the results of the general elections and the government formation will take place during this time we might see lots of crest and troughs. If the stock market can sustain a growth rate of 6-8% in these two months the Indian markets may be all set for another bull run and raise market to great peaks in no time. The bull run after all doesn't leave people with too much time to think!!

Also Read....
Is the worst over for Indian markets?


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