Jul 23
The BSE sensex hit an all time High on Friday the 7th of July crossing the 15000 mark.
This time the jubilations n celebrations were absent n response frm various investors quite muted.
Everyone is skeptical as to what course the sensex wd take frm here on n what returns one cd expect in the coming months.It has risen frm 3000 levels of 2003 to 15000 levels in 2007 giving a 5 fold return for investors who hang in there.
Going forwd,the returns at the max cd be only 20% per yr if u consider that sensex wd rise to 30000 in 5 yrs time.Thus the risk reward ratio is not very attractive.
gone r the days when u cd buy anything n still make a killing.Only very few sectors like capital goods,construction/realestate,telecom ,banks,oil-gas n steel hv participated in the current rally.Sectors like fmcg,consumer durables,auto,autio ancillary,cement,sugar,IT etc hv been underperforming the Index or giving negative returns.
Going ahead, the ride wd not be very smooth-it cd turn out to be very volatile with stock specific actions.
In my opinion,Retail investors shd try n book profits in scrips which has given phenomenal returns n keep 50% of their portfolio in cash.
They shd immdtly exit frm penny stocks n bad scrips booking losses if need be.
They shd refraion frm falling for the temptation to buy into stocks based on tips n rumours as it cd prove to be deterimental in the short term.
For the short term, the mkt cd consolidate n steadily drift lower due to profit booking.A 1000-2000 pt correction cannot be ruled out n this wd give good opportunity for Investors sitting on cash to re-enter at lower levels.
Caution is the watchword for now as the guidance given by IT behemoths next week n rising crude prices coupled with global cues wd determine the short term direction of the mkt.