In the last one week, from August 27 to September 3, the Sensex has moved about 580 points, or 4%, while the Nifty is up 172 points, or 4%. The Sensex is still 300 points away for its all-time high of 15,868.85, which it touched on July 24, while the Nifty is 200 points away from its all-time high of 4,647.95.

Factors like the sub-prime situation in the US and yen carry trade unwinding that pulled the markets down, seem to be now under control. So, how long will it take the markets to test their earlier highs?

Sanjay Sinha, CIO, SBI Mutal Fund, feels the markets could go much further if the valuations are right and growth story is intact. "Taking a short-term call would be tough for me. In August, we had FIIs selling close to about Rs 8,000 crore worth of stocks while mutual funds stepped in to buy stocks close to Rs 4,000 crore. We have seen the market rebound by more than 1,500 points. The markets need not be too obsessed about foreign institutional participation in the market, as we have seen domestic institutions coming in. Whenever the market fell because of a change in government, we saw investors leave equity funds. In 2006, when the markets fell because of the commodity crash, we saw investors holding on. In 2007, we have seen two crashes; one is February and the other in August. If our valuations are right and if our growth story is intact, we should see domestic markets going much further,” he added.

Sudarshan Sukhani of Technical Trends feels the markets can touch new highs if global and domestic factors remain positive. “I would say it’s going to new highs because the two-day consolidation that we saw yesterday and the day before, is all that the market is likely to do. Assuming that the environment remains friendly, i.e. international markets and the political scenario do not disturb, slowly and steadily we should see all-time new highs again. That is not difficult because we have see a 500-point rally and we need 150-points to make a record. Beyond that, I don’t think the index is going to move much higher and we will remain in a consolidation,” he added.

On how soon we are going to get back to test or challenge those all-time highs, Sukhani said, “I would not know. Given the momentum that we are seeing, if it is to happen it will happen in September itself as not much time is needed to move 150 points. The Nifty has done that sometimes in a day altogether, maybe this month probably.”