Monday, June 15, 2009

More to go

Interesting point where we stand in today's market. Domestic triggers seem positive with a healthy saving rate, positive cues from the government about oil deregulation and disinvestment, strong balance sheets of good quality companies. We seem ready for the next phase of growth. Of course, caution is needed considering that the global economy is still struggling to find its feet with a major part of Europe to report GDP de-growth.

Oil demand has now fundamentally shifted to newer participants like Asia and China/India will lead demand once the economy properly recovers. Oil can be range bound between $60-$70 till such time. Exploration activity has shown signs of picking up but early days yet.

Valuations have undergone a dramatic shift across sectors, particularly for mid caps. Analysts are at a loss to justify fresh buys and mostly are going with the flow for the moment. Since markets have not stabilised and we are still in the transition phase, it becomes difficult to assign relative valuation measures to stocks. It becomes additionally difficult as global companies can not be strictly compared with domestic peers due to different growth and operational parameters.