The power of scepticism
Source: ET IG
Even though it’s been three weeks since the Sensex scaled a new high, the Nifty is yet to post one of its own. But the Nifty has made a new high for its 20-week-old rally, at 3747. Though it’s got its digits right, the Nifty is still 27 points short of 3774, its May ’06 high. A non-random look at price action: When we celebrated the new life high of the Sensex in this column three weeks ago, we also made a case for why and how new highs are greeted with some amount of selling. True to form, the market spent eight days mildly easing back from the highs posted on the three-week-old break-out from 3600/12500
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Additional Readings:
- The unstoppables- Welcome to what could be the biggest ever investment boom in history.
- Breaking new ground - Sensex levels of 15000 by April look increasingly likely.
Additional Reports:
- Finding USD370bn - HSBC Can India finance her infrastructure needs? - India may require USD370bn as infrastructure investment to achieve a growth of 8.5% - This looks extremely unlikely without a huge budgetary expansion - We expect infrastructure funding to fall short, and growth to disappoint
Off-Topic Readings:
Parting Thought:
- The most common cause of low prices is pessimism - sometimes pervasive, sometimes specific to a company or industry. We want to do business in such an environment, not because we like pessimism but because we like the prices it produces. It's optimism that is the enemy of the rational buyer. - Warren Buffett
