Whats in store for the Sensex now?

With crude prices expected to go down further, the current pullback for Sensex is expected to last till 15,500 levels. In the short run, the Indian markets are expected to outperform other emerging markets due to the current post correctionary trend. Metals still seem overvalued and are expected to correct further. The Construction and Auto sectors will face margin pressures in the coming weeks and one is advised not to take any fresh positions in them.

The Sensex is very unlikely to actually outperform for the entire remainder of the year. It is expected that this year, Fixed Income Funds will give better returns than equities. Keeping this in mind, equity investments and mutual funds are expected to take a hit in terms of new entrants. This might also affect trade volumes during the year.

Mr Rakesh Jhunjhunwala feels that the Sensex will hit 25000 by 2012 but would fail to do much in 2007.He also said that the markets have seen a bull-run since April 2003 and one cannot have a bull market without corrections. The corrections would be testing the investors’ patience and their sheer belief in the markets, he said.

”All the corrections we have had in the last four years have had been deep but they have not been deep time-wise. I think the real patience and the real belief in the equity and in the market comes when the market tests you time-wise. So I think this is going to be one of the deepest and the longest corrections that we are going to have, in what I believe is going to be a very long bull market,” Jhunjhunwala said.