Expert Views: Where will the Sensex head to now?

Foreign forces behind the madness, as politicians would say--the US sub-prime crisis that has ballooned into a credit crisis across world markets. And there doesn't seem to any comfort from the measures being taken by the central governments.

Expert can not forecast a bottom for the benchmark index or how soon we will hit rock bottom. What I am seeing is sustained FII selling and lack of support from domestic institutions such as mutual funds and insurance companies who are sitting on cash to meet redemption pressures. There is panic fear among overseas investors, who themselves are faced with heavy redemption pressures in their home countries. These (sustained outflows) will have to end for the market to stabilise and SEBI's proactive measures on P-notes to come into effect.

There is an imbalance now. FIIs are having hassles in their country. This is a crucial time for markets.

Currently, the market is fraught with three negative factors: liquidity, valuations and global events. All these have spawned a negative sentiment among the Indian investors. If any of these factors turn positive, market will bottom out, be it restoration of FII confidence or IIP figures or receding inflation."

Investors can put money into equity mutual funds for a 3-5 year time horizon because a number of stocks are available below fair value. This is much like what the guru of investing Warren Buffet has said: When everybody is fearful be greedy and when everybody is greedy be fearful.

Valuations have become attractive for sometime now. It is difficult to sense and pick the bottom. I would say value is emerging in the markets. In fact, investors who would buy now with a two-year perspective are bound to reap gains. No doubt there is liquidity crunch globally and repercussions of which would make an impact on Indian markets. Even from a mutual funds' perspective, buying is emerging. I would say that sectoral bets would be a risky proposition. I am more comfortable with defensive sectors like FMCG, pharma and also banks.


Views have been added by many market expert