Of late the markets have registered quite steep growth which was unbelievable just 20 months before, when many reputed brokerage house and financial analysts were predicting the fall of sensex to 6000 levels. Volatility in any stock market world wide is a regular phenomenon but the market swings in India are for too trivial issues and to some extent predictable.

What has been happening regularly in India, especially since 1991, is markets suddenly go up to an extent unbelievable even by most optimistic bulls and suddenly everybody starts ruing how he missed the bus and how some one in his friendly neighborhood made millions overnight. Lured, he jumps into fray and then markets suddenly crash. Newspapers suddenly get flooded with columns from “financial analysts” who always claimed to predicted the fall and predict further fall in the sensex. In a bid to escape from further mounting losses, investor sells the scrips and swears not to enter the market again as his “stars” don’t match with market.

In fact, fact if you can make lots of money in this market. Lets see the way world is moving. China is a proven success story, but the country is not democratic. The growth or boom in economy is at the cost of huge exploitation of local workers. Though Chinese business is growing, corresponding purchasing power of Chinese people is not keeping pace. In India, manufacturing and services sector is looking up. In India purchasing power too is growing and hence it is further attracting capital inflows.

American economy is an open story by now, with no growth in industry except for arms or aviation.

Barring political turmoil, which by all chances is likely to happen in 2008, there is no threat to the economy. The liberalization process is irreversible. Whenever index registers sudden growth, lots of profit booking is inevitable which would bring the share prices down for a brief period.

FIIs and big broking houses too manipulate the market, they too trigger the fall to enter at lower levels. In this rally, as the rumors go, many mid-cap industry promoters liquidated their own holdings to re-enter at a later date.

So, what is the desired strategy at this time?

I strongly believe, Sensex is headed towards 20000 and above. It is no time to enter mid-caps. Better to regret not making profit in mid-caps than risking money. November/December period is likely too much profit booking for FIIs may book profit for reporting their year end results as well as new IPOs would suck up money from market.

Markets may witness sellout in next 3-5 months period due to political turmoil, thanks to our friendly Left parties.

Use all these opportunities to enter market at every dip below 17500 levels. Economy is booming and liberalization can not be reversed by any political party. Don’t buy more than your investment, not to be lured by credit limit allowed by brokers. This way you won’t be compelled to liquidate your holding at a loss.

Be systematic and don’t get carried away by euphoria or misleading predictions.