Dear All, Who -so-ever have interest in share market- current ongoing last few trading days were very confusing including today - but let me tell you, it was not like so.

Following the ongoing election and the fund needed by different political parties and dismal performance by corporates (companies) in the last 2-3 quarters and also in coming 1-2 quarters, corporates were and are not in the position; as they were in the last election; but parties need fund.
Now one of the ways that can assure them very good funds is share market. So what is happening in the market is, it is defying all the global cues for last 15 trading sessions and especially since the start of the election on Apr 18,09. Every day it is taking an almost u-turn in between start and close of the market. The market has turned as much volatile that no fundamental can be applied and behaving almost irrational and without any logic to support the volatility. The market is behaving like monthe expiry has approached. Its not the very first time market has seen such movement before and while the election is going. The difference is historical data shows that there is around 3-5 % change only at the duration of election, but this time it has seen a change of almost 35 %.
 
So what's the reasons exactly that has caused this much variation in the share market in this short span of time?
First, The fact is some big players are making money in behalf of the political parties to carry their expenses for the ongoing election.
Second, indian stock market and its stocks have turned quite attractive for forgein funds. As they are getting funds in their countries between 0-1% and getting return of more than 20%, so they are taking stakes in the fundamentally strong shares and so called blue chips and other under priced and discounted stocks have seen more than 50 % increase in their prices and even some stocks have seen more than 100% upsurge. Even the stocks which they have taken at very high prices, they in no hurry to sell their stakes in those.
Third, their are some sign of revival also in terms of corporate performance, that is also adding to the upsurge.
 
What Next in the market?
Market is expected to behave in tandem for next few trading sessions. But, don't expect this bull rally to continue for long time as almost all the stimulas packages are over and I think now onwards market will more depend on fundamental performance of economy and corporates others than any other thing. So, correction is expected once in near term and after that correction we can see our (Indian) stock market to go up slowly & steadly, meanwhile if we take longer period view small correction will continue to come almost by the end of FY 2010. But the corrections would have big impact on market and investor (after the one expected in the near future).
 
What Investor can Do in such a situation?
Take small position on fundamentally strong share at present and accumulate them when correction come and keep holding till the return level expected reached. And, it is almost sure than stock market is going to give very good return after the waited correction over the period of 1-2 years.
 
With Thanks & Regards,
Praveen Kr Sevak
Equity Research Analyst
Escorts Securities Ltd
11-Scindia House, CP
011-43587416