Uncertain Times: Bull Hunt

Bonds have always been a weapon of last resort for an investor who has been pushed against the wall by the markets. With Sensex hovering between 12500 and 13000, the next few weeks will continue to be volatile. The markets in Asia might see a stagnation in liquidity due to the same being channeled in US markets for the coming weeks. Keeping in mind India's high dependence on FII inflows, a subsequent fall of 500-1000 points in not unrealistic.

I feel that unless the 12500 level is broken with significant volumes and the fall continued with the same kind of volumes for 2 to 3 subsequent days, the markets will do just fine. Right now, many investors would step in for bottom wishing which could result in the market being pushed back above 14000 in the next 12 weeks.

But for risk diversification, right now is a good time to have some exposure to bonds and GETFs.