Crude price, inflation can spoil mkt show

MUMBAI: The stock market seldom makes sense to individual investors. Especially, at times when it looks indecisive. This time is no different.
The market has been dragged down from a high of 21K in November because experts feel runaway inflation, higher interest rates and crude prices would hurt corporate earnings.
However, notwithstanding these negatives, the BSE sensex is once again inching close to the 20,000-mark.The market closed at 19,287 on Friday.
When the market rose by 434 points on Wednesday, Taurus Mutual Fund CEO Waquar Naqvi had said: "It was amusing to see the market go up like that. I think people are looking to buy every time when there is no negative news in the market for a day.
However, there is still some negativity surrounding the market. Inflation refuses to go away, uncertainty about crude and the Middle East crisis still remain. Now, we also have to see how the earning season would pan out. The only comforting factor is that the fundamentals remain solid. So we won't be surprised if the market goes up further," he added. "We expect the market to go up in the short term. We believe we will see a new high in a few weeks," says Rakesh Goyal, senior vice president, Bonanza Portfolio.
However, he too agrees that the negative factors could spoil the show. Indeed they can. For example, inflation continues to hover high, and most experts believe that the Reserve Bank of India (RBI) doesn't have a choice but to raise policy rates aggressively. If that happens, it could definitely affect the economic growth rate. Needless to say that could cap the upside in the stock market. Most experts claim they are clueless about the direction the crude prices could take. This is because they believe that prices will subside once the trouble in Middle East abates. Also, they believe the slowdown in the economy may keep the prices down. They also point out that the temporary higher crude prices necessarily need not prove to be a drag on the market, as it has factored in higher crude prices and some slowdown in growth rate.
"We are asking our clients to tread with caution," says Sajag Sanghvi, a certified financial planner. "We are asking them to bet on the market with long term perspective. For example, we are telling our clients to continue with their systematic investment plan (SIP), as the long-term prospects of the market still looks bright." "However, if anyone wants to commit fresh money into the market, we are asking them to do it only when the market declines."