After the low in the stock market that was observed in 2009, today market is revolving in the base rate of 5400 being 10 per cent more or less in the past three years. After three years of low in the market, now it has moved towards higher range being side wards. It can be estimated that in the second half of 2012 market may show an all time new high.
Also, elections are ahead in 2014 so market might be a bit shaky as it has been seen in the past. But, I feel that every time it is not necessary that history will repeat itself, sometimes the completely reverse thing could happen to create a new history. So in my view if the government in 2014 will be stable and pro reform by any chance, then in the year 2014-15 Index will see a new high up to 35,000.
Also another reason why I feel that India will see new high in 2014-15 is that when the world economy was not in a good condition, then too India’s economy grew by 6% as compared to other countries. So if things fare well including the government and reforms then it will grow by 9% in 2014-15.
Due to the reforms by the government we cannot expect any change to happen overnight, its effects would be seen in at least a year’s time. But of course we can see a positive change in the sentiment and confidence of the people. We are moving from pessimism towards optimism. The market rise is 25% but written participation (people investing money) in the market is negligible. Though index has appreciated but there was hardly any investment made in the market. I feel that this was the time when people missed the opportunity as they were not prepared. Also in the past three years market has become range bound due to substantial rise. (5600 – 5800). This is indicating that there is a buying at every reaction and investors who did not participate in the rally are ready to invest when the market reacts. This might last till December 2012. January 2013 will see new buying in the market in anticipation of third quarter results and in expectation of further reforms. In India we do not need one time reform, but we need more of constant reforms as per the changes in the rapidly changing world economy.
PS: Written on 1st Feb 2013