The Hindu Business Line : It's now time for consolidation?

There isn't any reason to suspect that the height is a pre-Budget show-off. Market's confidence in the economy and corporate performance was so evidently strong and pervasive last week that it looked as if it was a new beginning.

Every player seemed to be ready for a new valuation for the market as a whole. The momentum engulfed almost everything - small, medium and big.

In was the biggest weekly gain in four months - the Sensex appreciated by 3.65 per cent and the Nifty by 2.8 per cent. The FMCG, pharmaceuticals, auto, bank and tea stocks powered the indices. The list of counters that finished at their year-high was the longest in the recent weeks. The number of stocks, particularly the mid-cap ones, which froze at the upper circuit on Friday, was a record of sorts for Dalal Street.

Long distance run: As the market imprinted an unmistakable signature of exuberance, the domestic and overseas players poured in money. The vision is clearly long-term. The expectation in the air is that economy is poised for a take-off.

The corporates are now aiming for a world scale and competitive efficiency. The inferiority complex is a thing of the past.

So the watchword for the smart investor is factor in the growth potential. If it is not a pre-Budget frenzy, is it an euphoria at the peak? Or is it simply a time for distribution?

It may be a coincidence that retail and institutional investors are timing their fresh entries now. But the general impression one gets talking to cross-section of market regulars is that no one wants to miss the bus. In market psychology, the left-out feeling is worse than losing.

As predicted in these columns last week, the next marathon for the Indian equities would see a confluence of liquidity flow from both domestic and overseas players. At this point in time, very few is willing to set a target for the benchmark in terms of a definite timeframe. This is also a time for readjustment in return expectation and the risk-return ratio.

Though the long-term bet is entirely on potential growth in earnings, short-term cues are being closely monitored by the big players to fine-tune their trading strategy.

Reading glass view: This week, the market may go in for a consolidation mode. The last week's 369 points rally for the Sensex came in with decent overall volumes but not without a real tug of war between the bulls and the bears.

At the current price level, the opportunity for entry and profit taking is divided by a thin line depending absolutely on individual choice.

The enthusiasm of retail investors suggests that the mid- and small-cap stocks are likely to thrive on bullish sentiment. The large-cap stock, on the other hand, may witness breathers, both intra-day as well as inter-day.

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