Of course I do not have an answer. However it is possible that markets are well priced…

1. 2 websites and 3 magazines asked me whether the markets are fully priced: I said I do not know, but then they wanted to know whether it will go higher. I said I do not know. Then they asked ‘Now that the markets are high how should a BIG investor invest? I said “it depends on how knowledgeable the investor is”. I said do a SIP.

2. One magazine asked “In this upmarket how should a small investor invest. I said ‘do a SIP’. The magazine felt that the answer to BOTH the questions CANNOT BE THE SAME.

3. Fund managers are booking profits: I have got a few smses from my relationship managers and others about dividend declaration. This means the fund managers are booking profits and do not wish to re-invest. If fund managers are bearish it means ‘Markets are fully priced, and hey idiot do not take away your money from here..or I will lose my aum”

4. Many clients are either asking or ‘more mid cap allocation’ or saying ‘too much of my money is in large cap…can se look at a higher allocation to midcap’. This normally is an indication that mid-cap run up is over, but large cap is still in a boom phase.

5. All those who missed the bus of selling at 21000 sensex, will be waiting to sell at 20,000. Here they will reconcile and say…”I always lose money in shares….” when the index was 21000 I bought XYZ at Rs. 58, now the index is back to 22000, but my XYZ is languishing at Rs. 14…no clue about what to do…”

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  1. Markets do not seem to be fully priced as yet for the simple reason that the Nifty & Sensex together is just a small sample of stocks. Markets comprise of universe of more than 4000 actively traded stocks & there are still many stocks / sectors that have relatively underperformed.Sectors like Shipping ,Cement(South laggard available at dirt cheap value considering the replacement cost ),Infrastructure relatively priced & having said that the answer to the Million dollar question “where are markets headed?” is still elusive.

  2. I think that there are several issues with the weightage of stocks in the Sensex. Abt 8 stocks account for 60% of the weightage.

    See some data here…at capitalstock – it is a wordpress blog

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