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Will the Market Crash?

With the market touching 19,000, one can't help but wonder if a crash is around the corner or a 20,000 new high is.

Last week, Finance Minister Chidambaram was quoted in the press as saying that the steep Sensex rise “sometimes surprises him and sometimes worries him”. One can only wonder which reaction hit him today.

In the fastest ever 1,000-point rally, the Sensex hit 19,000 today to close at 19,058.

The past one month's climb has been nothing but astounding. The Sensex touched 16,000 (September 19), 17,000 (September 26), 18,000 (October 9) and now 19,000.

It took just four trading sessions to move from 18,000 to 19,000. The stocks that contributed the most to the run up from 17,000 to 18,000 were identical to the ones that contributed to the latest rally: RIL, ICICI Bank, ONGC, L&T and Bharti Airtel.

The Sensex PE, at 19,058, is 26.10.

So should one logically expect a crash in the immediate future? According to Chidambaram, "to an extent, speculators are taking advantage of Sensex... I think things will cool down."

In the next issue of our magazine Mutual Fund Insight, which also happens to be the 5th anniversary issue, we posed the question to more than 20 fund managers.

Nearly all of them preferred to use the term “correction” as they believed that “crash” was too strong a word. And, neither did they feel that one was around the corner.

Talking of the anniversary issue, we also looked at 25 first class funds that you can consider in such heady days.

Meanwhile, the finance minister has other things to worry about. The appreciating rupee, for instance, which keeps rising on the back of FII inflows.

What is your Sensex? Maybe you should take a good look at your portfolio to see how you have done.