Skip to main content

Indian Markets - Buy or Sell ?

capital markets
Currently, Indian Capital Markets swinging to the tunes of Global markets & Scams and the Sensex is trading between 19k and 20k, after hitting a 3 year high of 21k a month ago. What does this all mean to an individual investor and what should he do at this point of time - buy, sell or hold?

Before we come to any conclusions, let us check out some of recent happenings in and around us. Recently markets have been hit with many scams, some of them directly impacting the markets, like the housing loans and Global events like European crisis, Korean shoot outs and other similar events. These events are causing substantial swings in the markets and the much talked about US Fed’s QE2 program is not having much impact, either.

Currently Sensex at 20k, trading at 17.1 x FY11E EPS and 14.6X FY12E EPS, which is at fair valuations. The strong FII inflows and strong earnings growth are providing support to the Indian markets' valuations at 15-18 x  FY12E EPS, above its 12-15x historical range, which would mean the Sensex in the range of 15-16k.The P/E expansion in multiples could be led by (1) continued strong FII inflows, (2) positive macro-economic outlook and (3) strong earnings growth, which could lead the markets higher.

To sum up, there is no doubt that the markets are at fair valuations, but the factors mentioned above could take the markets further up. Hence, existing investors could hold and ride the wave and anyone who wants to enter now, can participate in the current rally by taking the SIP method of investing in mutual funds.New investments and big ticket investments could be made only when sensex is available around historical range mentioned above.

After all investing is not that easy,  isn't it?

Popular posts from this blog

NSE Trading Holidays 2024

 Trading holidays for the calendar year 2024. The National Stock Exchange of India (NSE) has notified trading holidays for the calendar year 2024 as below: Muhurat Trading:  Timings of Muhurat Trading shall be notified subsequently. 

Historical Sensex Returns Updated - 2024

Historically Sensex has given returns of about 15% per year, despite volatility and price fluctuations of about -20% to +60%. The following table shows S&P BSE Sensex historical data - start  & close values and the yearly returns of the sensex from 2000 to 2024. So far during the year the   index has hit an all-time high of  75,124   and despite markets hitting all time highs not all stocks make all-time highs. There are many stocks still below their highs. Stocks like HDFC Bank, ITC, Asian paints are still well below their highs and some of them have given low returns over last 3-5 years. Individual or Retail investors can achieve consistent returns through investing via mutual funds , whether it be active or passive. Chasing returns from individual stocks is futile. Be a wise investor !