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18 September 2009

Nifty at 5000: What does it mean for you?

Nifty at 5000: What does it mean for you?

Where should investors park their money?

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ET Bureau

It has been a roller-coaster ride for investors right from the beginning of the year. Those who dared to bet against the crowd during the panic of March, have raked in unbelievable returns. Real estate and metal shares witnessed the sharpest bounceback, partly because these had also been badly beaten down during the bear phase. Other strong performers are banking and automobile shares. Investors briefly shifted to defensives like FMCG and pharma, but shunned them the moment the broad market started to look up.

Here are some experts' advice on where investors should park their money.

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Sanjay Dutt

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Sanjay Dutt
Director, Quantum Securities

This is a great event for the market and that too the markets have climbed every possible wall of worry and scepticism that has been there.

I would advice caution with the current levels and only from a longer term perspective people should stay invested and that too in stocks and in companies where they have conviction and they have a thorough understanding of the fundamentals, because the ride from here is not a straight line up, it is going to be pretty rocky.

Yes, momentum may carry us to 300 or 400 points more in the Nifty but we all know that it is pretty dangerous playing the momentum and if you do want to play, play for purely trading perspective with very tight stop losses.

It would be prudent at this point of time to really wait and see what happens in terms of what the RBI does next month, what the bankers do worldwide in the next few weeks as well as what the quarterly numbers are like in India and abroad.

Nirmal Jain

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Nirmal Jain
Chairman and Managing Director, Indiainfoline

If you look at corporate earnings or advance tax figures for second quarter then there is significant improvement and we should not forget that the last time it touched 15000 for the first time, it was about 2 years back, so earnings also have gone up say on an average 25% to 30%.

So this or the 5000 Nifty is equivalent to say maybe 4500 2 years ago or maybe 4300 2 years ago. So, earnings have kept the momentum even in an adverse year. The earnings in aggregate went up by 10%. This year we expect growth to be around 20%.

Another very important fact is that Indian macro fundamentals are far superior compared to other emerging markets, even China I would say and therefore the flow of foreign capital will continue. Unless you see something unexpected or completely catastrophic which we cannot foresee today, I think the market undertone will continue to remain bullish.

Market has already run up a lot in terms of discounting fundamentals of the next 6 months, so market should consolidate in this range which is Nifty maybe up to 5200 on the upside and on the lower side 4800 to 4900.

Hugh Young

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Hugh Young
Managing Director, Aberdeen AMC

In a global context, the case for India remains extremely strong. Good companies, well run economy that has not made the mistakes of many of the western economies, so those are all very positive points, but, like stock markets worldwide, India has run very-very hard and fast and I would say in common with other stock markets, ahead of fundamentals.

The good news about India is that the fundamentals specific to India are very healthy and better than most countries but at the moment, I am afraid we are seeing stock markets worldwide being listed by the same tide and some of them are rather vulnerable at these levels but the support for India is probably stronger than virtually every other major market in the world.

Read full text: India's fundamentals stronger than other markets

Motilal Oswal

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Motilal Oswal
CMD, Motilal Oswal Fin Services

Retail investors should invest in fundamentally-sound companies for the long term without having much reason to worry. As for the traders, there is a reason to be cautious. Long-term investors can invest in sectors such as auto, banking, telecom, infrastructure and FMCG. The advance tax numbers point to a good earnings season ahead. We are seeing participation of retail investors picking up in the markets, and new clients are being added.

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18 Sep 2009, 1022 hrs IST