"It is a milestone indeed, but considering the way the market has gained the last 600-800 points, it makes us believe that something is wrong somewhere," Arun Kejriwal of Kejriwal Research and Investment Services (KRIS) told PTI.
This trend shows that global cues had a very influential effect on our markets. "We should be growing on our own strength," Kejriwal cautioned, adding the "subprime issue was not resolved, not sorted out, it has just been postponed".
Problems in the US subprime market, where lenders give housing loans to people with riskier credit history, had in July led to a crash in the bourses worldwide, including India.
The Sensex story: 1,000 to 16,000!
Majority of the market observers appeared bullish, saying the rate cut by the US Federal Reserve would lead to similar moves across the world and this would put upward pressure on other asset classes such as equities.
"The outlook for the market remains bullish as lower Fed rates are likely to translate into downward pressure on interest rates globally and upward pressure on risky assets such as equities," Sachchidanand Shukla, an economist with Enam Securities, said.
However, it is difficult to completely rule out the possibility of subprime issue coming back to haunt again as such macro-events have back-ended effects, he said.
Shukla, however, added that most of the damage (from the subprime crisis) was done in the context of Indian market.
On a similar note, Asika Stock Brokers' Paras Bodhra said, "Subprime issue would not have that much impact now as fundamentals are strong in Indian market."
Premium Investments' S P Tulsian said the market for time being was not considering factors like industrial production or high crude prices and was solely focusing on the Fed cut.
"The US rate cut was above expectations and would boost fund inflow to emerging markets. However, any fresh subprime or political factor could have its affect," Tulsian noted.
According to investment bank Atherstone Group President Ajay Puri, the main factor behind the 16K level was the Fed's rate cut, which would ensure more liquidity flow from US.
"The Fed cut has in a way taken care of subprime crisis... Hedge fund redemption numbers would be the next to watch out for," Puri noted.
When asked whether today's rally signaled an end to subprime woes, JPMorgan AMC CEO Krishnamurthy Vijayan said, "Indices tend to rally or fall on news, and we recommend that investors ignore short-term movements in the markets. The Indian stock market has seen numerous ups and downs, and these do not reflect on the intrinsic worth of the underlying businesses nor do they affect our outlook on the country."
"We are consistently bullish on India," Vijayan added. On the Fed rate cut exerting a greater influence than domestic factors such as slowing industrial production growth,
Vijayan said: "While there may have been a short-term blip in the growth rate, we believe there is a long term secular growth trend in the Indian economy. Most long-term investors are in this market on the basis of their expectations from India in the next decade and beyond and a couple of days' euphoria or downturn does not affect their decision-making."
However, cautioning against the overall bullishness, Kejriwal said both crude and equities could not continue on the current upward trend and one of the two had to slow down.
"Tomorrow will be another day. Political scenario and Q2 results would play an important factor," he said.
