Can the Sensex be at 15000 even if the Dow drops to 5000 ! ? That’s a decoupled View

So the Sensex surged,ten days consecutively, to 11284 yesterday, and then quickly corrected sharply down to 10947,down 337 points today…It was just above 8000 in early March,a little over a month ago

What do you make of it ! ?

Two camps here :

The First Camp is Bullish and  talks of a Bull run happening…We’re not going to see October end Lows again….Supporting their view are two powerful indicators

  • Sensex has just breached the 200 DMA and has a long way to go…China is already 14% above it’s 200 DMA…so it’s drawing Inspiration from this
  • FIIs, who had reversed over US $ 2 billion in the first two months in 2009, have being buying into India in March and April to bring this figure down to close to a Billion now

This Camp clearly believes that upward Momentum will continue…They would probably affirm that the Sensex can be at 15000 even if the Dow drops to 5000!…that’s a decoupled view emerging 

The Second Camp is clearly worried and cautious at this rise in the Sensex…It’s at best a strong Bounce back in a Bear market.

They are more concerned with Valuation,both Macro and Micro, rather than Momentum…At 13 times,both Current and Forward, the Sensex is not really great Value…Looking outside the Sensex,the risk, as measured by Volatility, is getting higher.

Their fears are largely founded in the two “E’s” 

  • Earnings  : Clearly Declining…Infosys has already issued a strong caution…Reliance is an exception
  • Elections : No Clear Mandate Expected…If The Coalition is not headed by Congress or BJP,the stock markets will react

  Which Camp are you in ! ? 

MOMENTUM or VALUE ?

TRADER or INVESTOR ? 

TECHNICAL or FUNDAMENTAL ?

Go ahead with your Strategies…as long as you’re aware of the risks involved…I won’t grudge  you,your profits !…you took the risk for them !..Not I ! 

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