my my my – what do we have here – A 40% rise in 2-3 days possible?

Now, I am really ecstatic here and I have every reason to be one – The market opened twice and both the times something unprecedented happened – the markets needed to be be halted within matter of seconds.

• Markets opened at 9.55am at 12,173 and closed within 30 seconds hit the circuit with BSE rising 10% and NSE rising 14% –
• Markets re-opened at 11:55 and hit the circuit again in matter of 17 seconds touching close to 20% overall rise

Yes, I am Ecstatic and why not, many retail investors like me had invested in the market when it was close to 20,000. Instead many of them saw their portfolios cut to less than half the size, in matter of few weeks.

After a long wait of nearly 15 months, there is real big cheer in the market and why not, with this new UPA government coming in with more than expected majority – and importantly – Left getting shattered, the days ahead look great for India Inc and Indian stock markets.

Coming back to today’s upward mayhem  – The stock Market clocked whooping 20% in mere 47 seconds – take that ! The bigger question though from investors and traders point of view is

What will happen tomorrow and in coming days?

Here is my personal opinion – There are thousands of trades still remaining to go through, and if they do, we are seeing another day of upper circuit halt to the stock Markets tomorrow as well. Yes, I think we still have 1 upper circuit remaining. I also expect that market may even go beyond 40% (including today’s rise) by this weekend. Which will propel it to beyond 16000 levels.

Now here is my reasoning – The rally from 10,000k has been 90% driven by FII’s ( and they are the biggest winners in this rally) . We still have Domestic Mutual Fund houses who are still nearly 15% to 20% in cash, which I guess will enter the market soon – and dont forget the retail investors, many of them are still in cash. All this money has to yet come into the market.

I think, this stupendous rally is less because UPA has got majority and more because the left now are powerless and cannot come in the way of Economic Reforms that India Inc. has been asking the Government for last 5 years. And if at all the govt. performs even at par with India Inc’s expectations, we can surely see a new highs in next 12 to 18 months!

One of my Twitter friends asked me – Don’t you think market will go down due to profit bookings – Yes, there will be many who will sell and book profits – but there will be many more waiting in the wings to put in money at every fall. The bottom line is that this rally will not be very short-lived as few of them expect it to be.

There is another important aspect of this rally (bad for some, good for many) – The rupee will now appreciate. Infact, rupee exchange rate is inversely proportional to stock markets. As I write this the rupee has already appreciated to 48 against dollar – and with more market upsurge, Dollar may touch 45-46 levels. A bad thing for Adsense publishers. If you have dollars in bank, I suggest convert atleast a partial lot to rupees.

Having said all this, you have to keep in mind that we are not decoupled with global economy,and western markets especially European markets dont look like they will come out of recession that easily. The global cues are something that we will have to watch for time and again – And anything disastrous, like the Lehmann episode happens again, it may effect our markets adversely.

I have an alternate theory as well for this, and would be interesting to know how many of you buy it – With India’s stable government, higher likeliness of reforms in coming months, GDP growth of around 6-7% – India looks a much better markets than most, even BRIC nations included.

Dont you think FIIs will now prefer Indian markets and put in more money here than anywhere else – So probably foreign markets not doing well may be a blessing in disguise for us? What say?

Come on readers, let me hear what you guys think – Are you a Big Bull as much as I am :)?

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Author: Arun Prabhudesai

Arun Prabhudesai is founder / chief editor at trak.in. He jumped the Entrepreneurship bandwagon in early 2008 after a long 13 year stint in I.T Industry. You can follow him on twitter @trakin or get in touch with him at admin-at-trak-dot-in or 91.9822575676.

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