The 6000-mark looks a lot more reliable. And markets look good for some more.
The sensex did come tantalisingly close to the 6K mark in February 2000 but the present one is refreshingly different. This time, almost all key components of the 30-stock bellwether index contributed to the rise, making it much more broad-based and hence dependable, reliable and sustainable. Against the mainly tech-led boom (and bust) of 2000, today we see the return of the old economy, almost all of it.
But market players anticipate a "correction to fundamentals". "The movement of the economy and the restructuring etc of companies that brought in this year’s earnings have been factored into the share prices now. Further movement upward will depend on further performance," explains an analyst.
Global economy factors may change too. Like a slump in China’s demand for steel and other commodities or a change in its policies. Many companies have improved valuations thanks to this demand. China is seen as the long-term risk, so any real slowdown in its economy, or say a change in its sources for commodities can alter the fund flow. Big ipos are expected this year and they’ll definitely suck in a good part of fresh fii funds.
What should investors do? Fund managers advise holding on to their investments for 2-3 years. While calendar 2003 has been among the best, there’s yet scope for growth. In the short term, corrections will follow but many companies can outperform the broader market. If GDP grows by 7-8 cent, good companies can double that performance. Business thinks the market can go up by another 1000 points but keep your expectations a notch or two lower. Several experts also feel that the US won’t hike interest rates and stem growth. So funds will continue to flow into emerging markets.