Nifty at 2009 highs. What next?

Anyone who's followed the stock markets closely in the current calendar year wouldn't help but quote the famous Virginia Slims tagline, "You've come a long way baby". Indeed, with the global economy in disarray and credit markets frozen, anyone who would have predicted at the start of the year that the Nifty would notch up gains of close to 60% in a span of few months wouldn't have gotten way without a few chortles. But the markets have this nasty tendency of making bold predictions come true and certainly that was the case this time around. A flood of liquidity and the realization that India may not be as badly impacted from the financial crisis plaguing the west led to investors making a beeline for Indian stocks and in the process, leading to an impressive 60% gain on the benchmark Nifty. Whats more, with yesterday's gains, the Nifty has now reached its highest level for the year.

Obviously, the gains of this magnitude cannot persist indefinitely and there are already talks doing the rounds that the markets may have outlived their bullish phase and some near term pain could be in the offing. We are of the belief that timing the markets is a fool's game and hence, an investor wanting to invest at current levels should do so without fearing a near term correction. For given the long-term India story, he may not come out a loser from a 3-5 year perspective. Of course, he should not get disheartened by intermittent dips and instead, look at them as an opportunity to invest more.

Source: CMIE Prowess
Returns between 31st Dec 2008 and 28th Aug 2009