Sensex to move upwards

MUMBAI: The market rallied last week, albeit with a gut wrenching dip on Tuesday, when the Sensex fell 142 points on net sales of Rs 1100 crore by foreign investors.
This was after a rally of 67 points the previous day which provided a welcome relief to investors, like the burst of sunshine on a wintry day. After the disembowelling dip, the Sensex rallied again, rising 236 points over the next three days, for a weekly gain of 162 points (2.5%) to close at 6,605.
What is of interest is that after Tuesday’s dip, over the next two days, the Sensex recovered almost the entire ground lost on Tuesday, with foreign investors net buying of Rs 400 crore. This is encouraging, for it shows that domestic money is at work and that it takes more volume to push the market down than it does to pull it up; the reverse of what is conventially true.
The market may shake out nervous holders by periodic dips, but should continue its uptrend in the coming weeks. At least till the monsoons. One must then become a bit cautious; after a dozen successive years of good monsoon the probability of another good one statistically declines. The India story remains good, encouraging foreign investors to plonk their money in.
Besides, domestic investors are changing their saving pattern in a big way. They are discouraged by low interest rates (negative, after inflation) and are encouraged by tax free dividends and long term capital gains tax regime. So if the monsoon is again a normal one, the bull would run amok.
The factors that could becalm the raging bull would be global in context. One of the biggest concerns is US housing market. Property prices have zoomed, indeed globally, thanks to lower interest rates that encourage people to bid more for property.