Sensex crosses 10000 mark - Future Predictions on this mad BULL?

An interesting read from a blog...


I was on my way to grab some Vada Pav ( Indian version of Burger - atleast that's what I call ) when the news of sensex reaching 10002 got onto my phone somehow yesterday. Well, I was not surprised at all, with Indian budget coming up and Government riding high on 'India Shining' bandwagon, this was ought to happen. Today the sensex showed even more momentum and climbed up to 10082.28 with the high close to 10096 . Let me get it straight, I no marketing guru nor am I some weirdo whose has no knowledge of what 2+2 is ( BTW, is it 5? :s) but 1 thing I know surely is, my instincts, that never fail me in this volatile market and that tell me this is truly another mad bull run.

I would gain causiously in this market if I were to invest some money right now and even after some correction of sorts. I wouldn't be surprised if the correction as huge as 1500 comes around the corner, probably pre-budget or post-budget, but it would come for sure. One thing in this market is for sure, its highly over-valued market right now. Imagine, 3 years back, who would have thought that sensex would rise so high, so early, however some of the industry experts did predict this coming, but that were just mere 'predictions' and not any firm analysis of any sorts. I think it is the foreign investments that are pumping up the bull market.

India, at 16 times earnings, is among the most expensive emerging markets in the world. Of course, compared to GCC stock indices, the most expensive bourses on the planet, the Sensex overvaluation is small potatoes.

With the budget coming soon and the deficits of the rise, Government has lot of tough task ahead in forthcoming days. Will the deficit of 6 billion dollars overshadow the marvelous 8% GDP growth? Will the 60$/ barrel oil be the big hurdle in Dr. Manmohan Singh's 'Manmohanomics' ?
All this only time can tell.

One thing I would put a light on is the increasing salaries in the Industries. This would have a major effect in coming days to the industry giants like Wipro and Infosys. Reason? Their profit margins would decrease and hence their share values too as the operating cost would increase considerably and with the pace they are hiring up professional, it sure sound the other way round.

So I sit here in front of my computer commenting this senseless discussion and sipping on cup of coffee, the Bull market gets ready for the another eventful and volatile day ahead.

Disclaimer

Readers must be advised that while the information herein is expressed in good faith, its accuracy is not guaranteed. There is always the risk of loss while trading for which the Author is not responsible. The views expressed in the weblog is just an analysis based on Technical analysis and it should not be construed as an offer for buy or sell. Anyone trading based on the recommendations are doing so at their own risk and the Author is not responsible for any financial loss arising out of it.

Source: http://tsats.blogspot.com

Makes sense... this scepticism.

Of the many voices who were quoted by TOI yesterday, Guj Ambuja's ED Anil (?) Singhvi's was the lone opinion talking of a bubble in the making.

The ard core bulls justify by saying that markets are not overvalued : Sensex PE is 18 (ie lower than in the early 90s bull run). My question is : has anyone verified that figure. Has anyone seen that list of the Sensex 30 with respective PE ratios worked out. ( If so, will someone be good enough to post that list on this site ?)

Hope this will not turn out to be another "emperor's clothes" story. It will be a tragic farce if it did !!

AGILENT

I completely argree with you. That was the point of the article.

FOLKS
Does anyone out there happen to have a listing of the PE's (respective, recent and preferably historical also, together with weightages ) of the 30 Sensex scrips ??

Mush obliged if that list can be posted on this thread.

Objective is to try undertake a due diligence of the correctness (just for kicks ) of the computation. I get a funny feeling that in the absence of sufficient public awareness of this list (I mean how often does one get to see this in any newspaper or magazine?) , there could be some error in the final (weighted average) figure ... !!

Just possible ... though unlikely I admit

AGILENT

when u talk about pe ratio of 1992,u should also keep in mind high interests rates prevailling in 1992.take int.rates of that era as benchmark and draw ur conclusions