The Sensex seems to be in no mood to give up. While experts feel a correction is coming, the Sensex seems to belie them. So what can be expected from the market next? 

The Sensex closed up 64.98 points at 13,137.49. The Nifty too was up 19.10 points at 3796.4.

Ambareesh Baliga of Karvy Stock Broking is skeptical. "At this point of time, fundamentally, we are not very comfortable investing in the markets," he says. Explaining the recent market movements, he says, “There are lot of FIIs sitting on the sidelines with cash and I think those who had missed out earlier, are coming in and buying at lower levels. They take it as an opportunity to buy and maybe because of that support, the market is again bouncing back."

"At the same time, I feel there are a lot of shorts in the market, which are still getting covered every time the market bounces back, even a bit. So I think it is a combination of both, which is holding the markets up," he adds.

But he doubts that the markets will remain up for too long. Expecting a sharp knock since quite a while now, Baliga believes it should happen at least over the next month or month and half. "At least for the next 30-45 days, the upside is very limited and for the next 7-10 days, it could move in a range. After that, we should possibly see a knock," he says.

So how should one play the markets now? "We are doing more of trading with a slightly bigger stoploss and I believe that is the only way to trade in the market today," he suggests.

But Ajay Bagga of Lotus Asset Management believes it is very difficult to take cash out in this kind of market. "I would really advise people to be invested though there are calls of over-valuation, risk reward ratios really don’t not mean too much. I think rates have really peaked and I don’t think we are going to see much increase in interest rates in India. There are just too many good things happening to really take out money," he explains.

Giving his predictions for the market, Bagga says, "At these levels of market, a 100-point move either ways is not that great, as it’s still below a percent. So I would probably think just under 13,000 maybe 12,900 and on the upside. I frankly expect 14,000 move by January or February at the most, when 2008 numbers get more formally re-rated into the valuations. So I would say we would probably see 14,000 much faster. Then we have a risk of 12,500."

And it would be liquidity that will largely drive the markets to the next historic level, according to him. “Earnings are more or less factored-in into the prices and earnings will positively surprise a bit more in January. But we are seeing a lot of interest coming back into the Indian markets," he says.

Also, mutual fund interest is coming back, for example about three-four NFOs are coming through and according to him, one will see that trend coming back. "So as money gets raised and invested, we will see a bit of that support coming back into the market. Overall these are the triggers, liquidity being the biggest," he adds.