In an exciting journey, BSE Sensex has risen from 50,000 to 60,000 milestone in less than a year at its fastest pace. And now, predictions have started pouring in for the benchmark index to hit the 1 lakh mark soon as stock market participants are bullish on the current market rally.
However, with great prediction comes the word of caution as experts see a possibility of a short-term correction given the market exuberance has pushed valuations to very high levels.
“We are in a classical bull market like the 2003-2007 phase where this bull run is likely to continue for the next 2-3 years however I will put the word of caution after a parabolic move in last few days because short term correction can’t be ruled out in coming days,” said Santosh Meena, Head of Research, Swastika Investmart Ltd.
He believes that we are in a strong uptrend and outperforming global markets while some mean reversion can be seen in the coming days where rising crude oil prices and surge in US bond yield could cause near-term volatility.
“Since the overall view is bullish and Sensex can march towards the 100000 mark in this bull run, therefore, investors are advised to remain invested where any 10-20% correction will be a great buying opportunity. SIP is the best way to ride the current bull run,” Meena added.
Shares are headed for their fifth straight weekly gain with the sharp rally showing the impact of return of FPIs and local investors continuing to invest despite headwinds that cropped up time and again.
“At such valuations, earnings delivery becomes crucial,” said Gautam Duggad, head of research at Motilal Oswal Financial Services Ltd. “I would suggest investors be cautious now on small-and-mid caps.”
Indian markets have outperformed during September so far with MSCI World Index down 2.13 % and Nifty up by 4.03%.
“The absence of a 10% correction in the indices over the last 18 months shows the maturity of the local investors but also throws up the possibility of that happening over the next few weeks/months,” said Dhiraj Relli, MD & CEO, HDFC Securities.
Amid the buoyant sentiment and increased activity, valuations has reached elevated levels and demand consistent delivery on earnings expectations.
“Given rich valuations, one cannot ignore intermittent volatility – however we expect the positive momentum to continue on the back of improving economic activity and recovery in corporate earnings,” said Motilal Oswal, MD & CEO, Motilal Oswal Financial Services Limited.
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