Late surge and a flight to quality!

The NIFTY Index today move sharply upwards and did not come as a surprise. After all the battering that the index received through the whole of December 2011, while the entire of Asia was doing fine was more than perplexing even with all the home-grown problems. So bounce it did, and the question that every one would ask could be; will it head up all the way to 5000 levels and beyond. Well, looks like Pt. 5000 could be effortless, however, could get a little difficult in the interim as the selling at every higher point would accentuate and exiters would spoil the party.

That said, I would imagine that the line of thought would not change, and we should continue to nibble away meaningfully at these levels by investing bit by bit. Just like we SIP the hot coffee, SIP away your blues of the market by starting as many SIP’s as possible for your clients. I am certain that around the same time next year, you could be a proud RM/WM to flaunt the statement to your client.

Coming back to market performance, the pattern was very typical too; all the action on the upside was limited to large caps, which means the out of favor mid/small caps are continuing to be just that; out of favor. My sense is that they would continue to remain out of favor until they demonstrate the resilience through quarterly results. Thankfully our set of mid/small companies are extremely ‘jugaadu’ and they would come out of this ruckus in flying colors. So it means that this out of favorness would be extended a while but is not a permanent feature.

We are now on the last legs of the year 2011. Then again it would bring in all the brand new (doomsday) year 2012. Just like our boss who is a contrarian to the core and has been successful with this philosophy; don’t be surprised if 2012 is a contrarian year. People have labeled it the year of Doom – and this would turn out to be the trump year. Remember that 2011 was labeled as the turn around year 12 months ago and turned out to be dud.

Strange are the ways. As they say – never predict, especially about the future.