WILL SENSEX CONTINUE ITS BULLISH RUN IN 2007?

Sensex and Nifty reported 4th day consecutive losses on Tuesday. I fear that the bullish run is going to see an end for the Sensex in 2007.

The reason why I am saying this is that the interest rates is going up. It is likely to increase a little more in the near future as the inflation is not under control. This will give investors another opportunity to invest in fixed deposits which will give them return in addition to security. Steel prices, cement prices and real estate prices are also to rise in the near future. And home loans are also increasing so as to contain the rapid growth in the real estate sector. This will again lead to decrease in the value of such related stocks.

Again the introduction of VAT will result in high prices for the cigarrate industry. Again decreasing the value of ITC and other such related stocks.

The price of fuel is also decreasing day by day and the oil companies are also not getting new discoveries and thus will affect their valuation.

Their is also a possibility of the US economy to slow down. If it happens then the services and the pharma industry which depends on the US and European markets will also face recession and thus affecting the value of their stocks.

So major industries like banking, steel, cement, IT and services, pharma and oil companies which contribute a lot to the market capitalization in the Sensex may face a slow down. And as a result the Sensex may lose its bullish trend.

Finally I want to add that it is a well known fact that the Indian market is overvalued and it will see a correction in the near future. I think the near future has come. May be in June- September the market will crash.

Another important reminder is that the earlier two market crash was in 1987 and 1997. This is 2007. Have you got any relation? Its ten year difference and the last number is 7 (of 2007). May be superstitions but market also runs on speculations.......