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Market Outlook

Sunday, November 22, 2009 Leave a comment Go to comments

As indicated last week, this market is still looking very bullish in the short term. Although it might be difficult to find value in the large caps, one can definitely find some value in the midcap and small cap space. at the same time, one needs to be mindful of the fact that FII liquidity can further drive large cap prices. So large caps might be the best place to ride the short term momentum.

I still don’t find a bubble like situation in the market as many stocks in the small and midcap space are still languishing since June -July. As a matter of fact many stocks have gone down since July. This is unlike 2007 when each and every stock was moving up in a vertically! This makes the journey from 5000 to 6000 very different from the last time.

There is still a scope to find potential multibaggers primarily in the small cap area where stocks are still below the 500 crore market cap with PEs well below 10. So keep your eyes open and do ample research before you pick stocks in this area. It is very easy to land up with junk!

The first hurdle that needs to be crossed is the level of 5200 on NIFTY which can then propel the index towards 5400-5600 range. On the downside 4900 shall be the level to watch.

As far sectors go, I will still ride the old favourites in auto like Maruti and Tata Motors. In IT, the troika of Infy,TCS and Wipro show no signs of stopping while in Pharma Dr. Reddy and Ranbaxy still rule!

RIL might add some spark to the markets with its offer to buy Dutch  petrochem firm LyondellBasell. Read the story.

One doesn’t need to be a short term trader to make money in these markets.

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