Year 2006 saw the markets tumbling from 12000 to 8800 levels, though the markets partially recovered their losses in the later part of the year. Year 2007 witnessed the markets touching new highs. The year also would be remembered as one of the most volatile years in the stock market history of the country where gains or losses in a single day were equivalent to what were witnessed over 3 months in the past.

The year, also, would be known as the first year where it was convincing beyond a point that Indian markets could not be de-linked from international sentiments. Just a week before Diwali, while the index was hovering around at 18000 levels, it seemed unbelievable that it would touch 20000 levels. It did and the stock markets were actually able to earn the retail investor’s confidence in the market.

Now; where the markets would be headed to in the year 2008? Which sectors should an investor look for and which sector to ignore? Would IT sector perform this year or woul the appreciation in rupee erode its strength even further?

Few things that are going to matter in the year are that for one emerging markets as India and China are set to grow; second; Elections or prospect of imminent elections courtesy the Left parties are going to maul the market; albeit for short term; thirdly real estate growth would attract lot of money from investment market into reality market and fourth but most important; SEBi is likely to introduce some more investors friendly products in the market.

We cannot ignore the fact that stock market no longer gives any return in black; which the property market still does. With high rate of taxation and no reduction in taxation despite higher tax compliance is going to affect the sentiment.

No doubt retail investors have gained some confidence in the market, yet he remains a fence sitter. Every gain in the market faces immediate profit booking where investors rather prefer to enter market again at higher prices and every loss in the market witnesses frantic selling.

Manufacturing sectors where China has strong growth rate would no more be a safe sector in sector. Therefore, bulk pharma would not an attractive sector.

Services sector would continue to grow and hence stay invested or accumulate at every fall in sectors like Bharati, RCOM etc.

Oil would continue to grow and hence reliance, RNRL, ONGC would deliver good returns despite their high pricing.

Bond markets never give good return at times when reality and stock markets boom.

2008 could well be an election year and hence tax sops are expected. This is going to fuel the market but the behavior of left parties is puzzling the market as the next election could lead to hung parliament.

Congress not faring too well in Gujarat and Himachal strengthens the prospect of hung parliament. However such losses have always been temporary and as markets are today, the boom appears to stay for at least short term future. Enter the markets at each dip.

2008 may see markets touching 25000 levels, may be in the first half itself.