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Volatility not a good sign; 18K within reach: Analysts
October 03, 2007 18:46 IST
Last Updated: October 03, 2007 19:34 IST
Though Dalal Street [Get Quote] witnessed high drama on Wednesday with benchmark index Sensex swaying 600 points during the day and the 18,000-mark remains within reach, analysts believe the volatility may not augur well for the bourses.
On when the benchmark index would cross the 8,000 mark, Parmar said, "It is as good as anybody's guess ...yours or mine."
While Asika Stock Brokers' Paras Bodhra said, "Sensex is not likely to touch 18K in a day or two but it might reach that level by the end of this month. It would be healthy if the markets would consolidate in the range between 17 to 18K".
The gain of about 200-300 points each day in just four sessions and the sudden surge to the new peak indicates towards a bubble formation in the market, Mutual Fund Tracking firm Value Research Online CEO Dhirendra Kumar said.
"The sudden dips and scaling of new peaks scares the investors and the nervousness is bound to affect the market sentiments any day," Kumar added.
"A combination of factors including global cues and profit booking has led to the volatility....there is fear and nervousness and one small trigger or rumour can bring the market down," Kejriwal said.
Besides, FIIs who have invested over Rs 19,000 crore (Rs 190 billion) in the markets in September are responsible for the positive rally in the market.
"The FIIs were responsible for the bull run in the market. Though nothing in concrete can be said regarding FIIs reaction at this moment, but hedge funds are likely to withdraw and if this happens, it would drag down the market to 16,000 level," Tulsian said.
While, analysts believe the heavy liquidity in the market has led to the fast-paced rally at the bourses.
"FIIs are pouring money like anything. The euphoria in the market is because of the growth in the Indian economy and as the GDP of the country is within the range of 8 to 8.5 per cent... This growth momentum would continue," Paras said.