The good news has been priced in: Sharekhan
- We have been saying that the better-than-expected earnings of the corporates and a pause by the Federal Reserve (Fed) in hiking interest rates would be the key drivers of the Sensex in the short term (see our market outlook reports dated June 3, 2006 and August 2, 2006).
- While both the factors have played out in favour of the markets, we believe that the same have already been priced in the valuations. The earnings of the corporates and the economic growth numbers (tax collections, IIP etc) remain buoyant and high cash levels of over Rs12,000 crore with the domestic mutual funds should also support the market. However, we do not see too much upside from here.
- Our 12-month target of the Sensex at 12,000 would give a return of only 6% from here on and this indicates that the market is now close to being fully valued.
