The S&P is also in unchartered territory, and it is now in the 6th year of a bull run and very few bull runs have gone beyond 5 years. Another aspect is that the P/E is now in 18 plus level which is usually when the bulls tap out. It is similar in situation to our P/E which has also moved into 18 plus level.How long will this market hold….well any bad news will be taken as an excuse for a correction. The S&P will go in for a deep correction, it is currently at the 2007 level before the crash.The US GDP has to go above 3.5 percent for this bull run to be fed. Though the run is broad based, stronger then those before it, and not specific sector driven, even then the data coming out should show that such a run is warranted.
The situation with Nifty is different, we are running on a poor growth with high interest rate and an undecided inflation. The only thing which it has going for it is that the hope a strong government will come in the centre and many believe that the BJP will be the answer. Now tha needs carefull study, reminds me of a horse race when you try betting on the winner and you have other 9 other horses in the race ensuring that the favorite does not win. Same is the case with BJP. Delhi state election is a prime example. Try taking a look at the put options at 5000 and 5200 levels , for May series.This would make things clear .Now the other question is the rally we are seeing now a pre election rally which will extend to election date and even the result day? That only time will tell us or show us.
Tomorrow China is going to see their first internal default, and not that anybody is too worried or running to the rescue. But this would set precedent for future defaults. That is a worrying doubt. I share Soro’s view that we shall see the next down ward spiral coming out from China. And one that will leave the world shocked and bewildered.
Tomorrow is Friday and weekly closing, the futures contracts for India Vix is an eye opener, and yes we shall see the Nifty spot going beyond the 6415 level and may go upto 6345 or there about and then decide to call it a day and drop down.
The FII’s have been pumping in money into our market.They have covered their shorts at 6333 level and are long, however my take is that is that they would like to cash out soon enough convert the rupees into dollar at an attractive level and come back into the market when the rupee is down, so will be the market by then. A hung parliament, though many would not like, can be a reality. This will bring the markets down very fast.
Yes indicators do show that the bull in our market can run for some more time…..but then the bull does need a rest some time or the other and looks it can be sooner than later.