The Indian market has exhibited some strength over the past few weeks. The market is now in its eighth week of rise from its October intra-day lows.
The BSE Sensex is up 31% since its October lows and this is the fourth time since the bear market started in January that we’ve seen a rally of 20%+ and the longest one thus far. The broad market has started to outperform the narrow market with a 5% outperformance over the past week.
We think investors should booking profits. Fundamentals remain weak and we do not think valuations have become “cheap” – although they are fair (Exhibit 5). Earnings for this quarter are likely to be quite bad when they are announced in January. This is a typical year-end rally which tends to sell off in February.
This is significant divergence from what Financial Astrologer has predicted 🙂 Anyway, our goal is to stay for long term in the market eating profits wherever possible 🙂