The markets seemed to have celebrated Diwali as they have been trading weak since the past few sessions. This weakness comes on the back of global jitters with US markets plunging after NY attorney general expanded mortgage probe.  

But more importantly Indian markets have been relative outperformers as compared to its Asian peers. Indian markets have relatively outperformed the Asian peers as they are more dependent on exports to US. Sensex was down 1.2%, on the day when Shanghai Composite down nearly 5% or 271.76, Taiwan Weighted down 4%, Hang Seng was  down 3% Jakarta Composite & Nikkie each down 2%. 

Most of analyst feel that this strength will be continued to be displayed in the long run with some small profit booking and consolidation. Some feel that the period of consolidation is expected to be a couple of weeks while some say it could last till the end of year.  

According to Deven Choksey of KR Choksey “It is a week of consolidation, few stocks have led the rally and the markets are seeing some fatigueness. In near time we will see some sideways movement in the markets and then it will resume the uptrend.” 

Choksey feel that one should remain invested, one can book some profits in the rising markets and re enter at the lower levels. 

Gaurang Shah of Geojit Financial said, “The markets will remain rangebound for the entire month of November December. All the triggers are done with currently and markets will start moving the positive direction again in FY08. The rational behind this being more registrations as FIIs will be done by then and fresh inflows will be seen.” 

He says long term investors should stay invested in with long term view, the markets have see a sharp run up. P Notes have curtailed some of the inflows in the short term but the long term view is bullish. The trades need to rework the strategies because the strategy which worked at 4,000 levels won’t work. With increased volatility traders will have to keep smaller margins and get in and out faster. 

It can be well interpreted that the marketmen continue to be bullish on markets, which can reiterated with Sangeeta Purshotam Head of Institutional Sales at Religare is of the view that the long term momentum is upwards, bouts of profit booking will be seen going ahead. Markets usually end on a positive note on mahurat trading and on long term basis the momentum is intact. Prakash Gaba and SP Tulsian also share similar view that and are bullish on the markets.  

But the streak of volatility on account of premium valuations at which the markets are trading cannot be ignored. Sreesankar of ILFS says that the market will continue to be volatile, expensive and liquidity driven.  

When we look at the levels given by some of the technical anayst the downside is not expected to be as sharp as the uptrend. Rahul Mohindar of Viratechindia is positive on markets with a long to medium term. In the short term the markets may see a correction and the Sensex may go down to 18,400. But constant buying will be seen at lower levels. 

Technical Analyst, Ashwani Gujral feels that the markets will see correction in the near term and Nifty will go down to 5,650 levels. It can hold 5,650 levels unless global markets crash. If Nifty crosses 6000 mark it will see a non stop rally upto 6800 levels, provided global markets do not see further fall.  

Vijay Bhambwani, CEO of BSPLIndia.com is of the view that in the near term the markets will be bearish as the bulls are losing steam. But with a six months horizon markets will rally.