Market Euphoria?

I remember a quote today by Sir John Templeton "Bull Market are Born on Pessimism,grow on skepticism,mature on optimism,and die on EUPHORIA''

Markets seem to have achieved a sort of mini-euphoric phase given the relentless rally of about three months without any significant correction. Various polls suggest most of people are bullish that markets will touch new highs.

Markets are at dizzy highs despite gloomy economic data. And things may get worse before they get any better with sensex touching 41000 mark & nifty nearing 12200,at current levels India is still the most expensive among peers. This makes investing a risky bet.

The slowdown in the economy means that earnings in sectors such as automobiles, consumer discretionary and some parts of consumer staples will be within the standard range. Orders in a large way have not yet trickled into the capital goods and infrastructure sectors, which means that this portion of the market is not expected to turn up just yet. That leaves only a few domestic consumption stocks to lead the earnings growth.It should not be forgotten that most of the optimism is restricted to a few big stocks. Only eight of the 30 Sensex constituents have gained more than 20% in the year to date, while the benchmark Sensex and Nifty are up 11-13%. The contribution of Sensex stocks to India’s market cap has grown from 44.77% in January to 47.23% at current levels.But what this has done is that it made some Indian stocks very expensive. Besides, it has driven the valuations of the Nifty sky-high.

Moreover, Recent IPO(such as IRCTC & Ujjivan SFB) are frantically getting oversubscribed; new ones are also buzzing and are getting ready with the same energy. Ideally, these are euphoric states, which make ‘herding’ more conspicuous: buying when markets are going up. 

All the key indicators (GDP Data & Industrial Output) reveal that the economy is not in a good shape at all. However, the Indian equity market has largely been buoyant on account of better-than-expected corporate earnings in the September quarter and on expectations of further tax reforms by the government.

From Now on everybody will start thinking them as super genious when all the stock horse,donkey even pigs will fly sky high.I think euphoria has begun.