Don't get carried away by the surging stock market, warn analysts; say changes that investors and corporate are yearning for will not happen overnight
Don't get carried away by the surging stock market, warn analysts; sayu00a0 changes that investors and corporate are yearning for will not happen overnight
Sixty seconds of trading and whoooosh! Shares breached the upper limit yesterday as the Sensex rose 1,950 points, the most allowed in a single session.
Analysts and financial consultants put it down to political solidity combined with hopes of an economic revival. Here's what some of them had to say about the surge:
Harish Bijoor, political analyst: "The election outcome has given a boost to the capital goods and infrastructure stocks. Hopes of a pick-up in government spending have brought cheer to these sectors. As per estimates, India needs $ 500 billion by 2012 to upgrade its airports, roads and inadequate utilities."
Gaurav Dharma, financial analyst: "In times such as these when there is the temptation to get carried away and go with the flow, it always makes sense to step back and do a reality check. While I don't want to sound like a party pooper, the fact remains that the changes that investors and corporate are yearning for will not happen overnight."
Sandeep Shastri, financial consultant: "India cannot sustain a high growth rate of 9-10 per cent unless it develops adequate infrastructure in sectors like power, ports and roads. In the interim budget speech on February 16, the finance minister had indicated bridging the infrastructure gap by increasing the investment in infrastructure to more than 9 per cent of the GDP by 2014."
Investors are also hoping for pension and banking reforms, a go-ahead for foreign investment in retail, private participation in the defence sector, further rationalisation of the corporate and individual tax structure and a push for the farm sector.
Tips to sail through...
Stock broker Sadanand R says:
>>Do not get washed away with the election results.u00a0 Investors should do a thorough bottom-up analysis and invest only in those stocks which boast of strong fundamentals from a long-term perspective.
>>Keep a close eye on valuations for even the best stock will not do you any good if bought at expensive valuations.
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