Although the european debt crisis could potentially get out of control and a logical possibility of a disaster exists, it is unlikely that any disaster will take place in the next couple of quarters. Thus, in my opinion, the next 3 or 4 quarters are likely to be of healthy growth with double digit IIP. Only economic indicator which will be slightly out of favor will be inflation. But the fear of debt crisis and slowing of activity in several European countries due to austerity measures are likely to keep fuel prices low, and thus help keeping inflation under control. In any case, to summarize, I do think the markets will make a new 52 week high in the coming 3 quarters.
Investment Opportunity lying ahead
The above logic doesn't mean that the markets won't fall. There are various reasons for market to fall in the short term. One of the principal reasons is pulling out of funds by FII's. I think it is possible we may see 4500 levels for Nifty in the coming month. If that happens, I believe it will be a wonderful opportunity for medium term investment. I am sitting on some cash, waiting to see if Nifty does fall to 4500 level. I am simply going to put all the cash in a Mutual Fund (currently the ones I have in mind are Reliance Growth Fund, Birla Sun Life Midcap Fund and Sundaram Paribas Select Midcap Fund). That would be a wonderful investment opportunity. If you are thinking along similar lines, don't forget to book your profits in 6 months, because the future ahead, who knows...
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