The Running of the Bulls: Sensex Conquers 13K
By Ian Cooper
Wednesday Nov 01, 2006
Months after a May-June 2006 market meltdown to 9,000, Bombay’s Sensex index nailed a new lifetime high above 13,000 on Monday, surging past the 12,671.11 high of May 11, 2006 on as domestic and overseas’ bulls cheered continue to be impressed by corporate earnings and the underlying strength of the India economy. It doesn’t hurt that global investors have invested more than $1.2 billion in Indian stocks in October 2006 alone, according to IndiaExpress.com.
There’s little doubt that the India, whose Sensex cleared several psychological barriers, including 10K, 11K, and 12K barriers, has become an attractive investment for worldwide investors. And there’s little doubt that once the latest sustains itself, we’re likely to see heavy buy interest in small and mid-cap names, especially those associated with e-commerce, namely Rediff (REDF) and Sify (SIFY), in our opinion.
But could we see 14K by year’s end? It could happen. Consider the strong corporate earnings, the strong overseas fund inflow, the positive news that India will spend $350 billion on infrastructure, and a confident Finance Minister P. Chidambaram who believes India could expand by 10% in “the near future and poverty afflicting millions be eradicated in the next 10-20 years,” according to FinancialExpress.com.
However, does the latest Sensex run through four psychological barriers overvalue India stocks? Nope. The economy is running strong. Corporate earnings are good. And, considering the historical bull runs witnessed by the likes of American and Japanese markets, there’s no reason why the Sensex run couldn’t be sustained. Welcome to the Indian bull market…
Ian L. Cooper
Editor, EVS / Early Alert Trader, GRESSOR.com and Red Zone Profits
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