Indian Markets are looking really strong as of date. It has outperformed all of the global markets including US, Europe and Asian markets. It looks like the only market where FII money is coming in recently is our Indian stock market and no other market. All the rest of the markets are hardly moving up but our markets are making new highs. In the past 7 days, sensex has moved up more than 1000 points which is a very strong move.

Today we even touched 5900 points on the nifty but then witnessed a strong profit booking move and ended up closing in the red around 5828. However no need to be disheartened, after rallying more than 300 points in a week, if we face a 30 point correction in the nifty then that is nothing. Today’s fall was pretty much expected due to the rate hikes by Reserve Bank Of India. From a longer term view, our markets are looking really positive. I personally feel that we will cross 21,000 on the sensex before our grand Diwali festival. Some brokerage firms believe that we shall cross 23,000 on the sensex by year end.

Whats participating in the rally?

As of today, the only thing that is dragging the markets to new highs are FII’s purchase. No retail investors or Mutual Funds or any other DIIs are participating, infact they are net sellers. Domestic people are probably scared to put their money in this expensive market as they are fearing a 2008 stock market crash, so they are not ready to take any kinds of risk and are selling at every rally. However the positive sign is FII’s interests in our market. They are positive on the India Growth Story and so they are pouring in money each day into our markets.

Should Retail Investors Participate?

I personally believe that markets are still very positive for the next 6 months and every correction in the markets should be used as an opportunity to buy into the market. The markets as of now are looking really strong and any correction in the markets will be used as an opportunity by FIIs to purchase more. So why not you get into the market during the correction/consolidation phase and sell when we make new highs in the coming months?

However be very stock specific, if any good company corrects a few percent, get into it, make profits and sell. Don’t buy the companies that have already rallied up a lot, however try to buy good undervalued stocks as if the markets make new highs, the undervalued stocks will pick up on the value. For example, see how Tata Steel was not performing and it rallied from 500 to 600 in a matter of days. Even Reliance managed to grab 80 points upmove in a short span of time. Jaiprakash Associates managed to grab 15% in September alone. Try to get into stocks that is going to give good appreciation in the coming months.

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