Don't go overboard on bullish sensex, warn stock brokers

CHANDIGARH: With the Bombay Stock Exchange (BSE) sensex showing a bullish trend, stock analysts have cautioned investors to be more vigilant due to the increased volatility in the market.
The broker community in the city has pointed out that as there would be no changes on the economic front for the next few months with the recent dissolution of the 13th Lok Sabha, the sensex will find it difficult to reach the 7,000 points barrier.
"Caution is the buzz word in the stock market now. Every investor needs to be cautious and take guidance of experts and brokers before taking the plunge," said V Kumar, a stock broker.
He said that volatility was caused because of market fluctuation by the Foreign Institutional Investors (FIIs) and other players with large funds for trading. "These players are known to pull out suddenly leading to a crash," he added.
"The Sensex greatly depends on three major factors — stable government, good monsoon and economic growth of the industries. As policies are already announced for the next few months, only the monsoon factor, which will be known by April, will now be in focus, said Kumar.
Investors in stocks constitute about two per cent of the country''s population while it is about five per cent in Chandigarh and the surrounding areas. This is mainly due to the high salaried class and literacy rate, said V K Joshi, another broker in the city. The city has about 60 stock-brokers, he said."The fiscal year (2003-04) began with 2,985 points in April and had a smooth ride from 3,000-6,000 points in the last 10 months, which was basically due to the efforts of the finance minister''s marketfriendly budget and the industrial growth," said Kumar.
In fact, even before the minister announced a cut in customs and excise duties, analysts were highly optimistic about a rise in the market, said Joshi.
The success of Saarc summit at Islamabad has also contributed to the positive feeling in the market. Analysts said economic gains will result from the implementation of these decisions.
Investors should concentrate on sectors like cement, steel, textile, paper which are doing well and are good for long time gains, said Joshi.