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Veena Venugopal

Mumbai , Sept. 8

RECORDS have become a matter of routine for the indices lately. However, despite the fast clip at which the Sensex was galloping after crossing the 7,000- level, analysts were chary of predicting a quick 8,000.

At the beginning of this week, when the 30-stock benchmark index came within touching distance of 8,000, two diametrically opposite views began to emerge - one suggesting quick corrections as the market was not ready for 8,000 and the other suggesting an easy crossing past the psychological mark.

Even as recently as July this year, the Finance Minister, Mr P. Chidambaram, had said that he would be concerned if the Sensex crosses 8,000, at the current potential of the economy.

Though the Sensex breached this level in less than two months, the Minister is no longer worried about this rise.

With the projected GDP growth and industrial growth figures, market experts see the oncoming results season as one that will corroborate current valuations.

However, the spectre of corrections looms large and a prediction of "5-10 per cent corrections should logically happen" is a common refrain.

"This is a classical bull market, where all the bad news is shut off. In a textbook bull market, there are three phases and ours is in phase two currently. There will be a third phase which would be the top of the current run," said Mr Ramesh Damani, investment advisor.

So far, even in the 15 per cent run-up between 7,000 and 8,000, the markets have ignored crude oil prices rising to $70 a barrel and the deluge that submerged much of the country's financial capital.

Retail investors, several of whom turned cautious and booked profits on their investments when the market was between 6,500-7,000, are now back in the game. "The current market sentiment is sucking people in. There is easy money in the street," said Mr Damani.

Redemption from mutual funds in a manner of booking profits is welcome.

But investors are now redeeming funds that have performed over the last 4-5 years to invest in new fund offers of other schemes to avail of the Rs 10 offer price. This is not a healthy trend, according to Mr S.V. Prasad, CEO, Birla Sun Life MF.

FIIs continue to be the torchbearers in this market, though mutual funds have also joined the buying frenzy. There are new sets of FIIs entering the Indian market every week. If Japanese investors were the flavour of the second quarter of this calendar year, Scandinavian investors have taken over in the third.

The average man on the street, however, continues to remain benign about the euphoria surrounding Dalal Street.

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