The markets made new lifetime highs on both the SENSEX and the NIFTY and one saw a huge rally on Friday as well with these indices rising close to 2% each. What is important is that the retail investor is not visible anywhere on the horizon and there is zero euphoria even with a landmark and historical event occuring. This augurs well for the sustainability of the rally though many may not like this being said. The fact remains that with the lowest level of the pyramid not participating, the distance in terms of time and value of the indices to be achieved is still quite some distance away. This should be comfort for all.

FII’s were the mainstay of this rally and bought aggressively with over Rs 5,000 crs of net purchases in the week with half of it coming on Friday. Domestic institutions continued to be sellers and sold worth Rs 2,100 crs. The government did a bulk deal and sold shares of BHEL to LIC. It is likely to complete the sale of IOC shares to ONGC and OIL this week. There is no clarity as yet to the timing of the sale of SUUTI shares of Axis Bank and ITC. The PSU ETF is likely to hit the market very shortly and it would have to be seen how the same fares at the primary sale and then post listing. This would probably be the last divestment by the present government.

Markets have gained substantially in the previous week and would continue to gain in the coming eight week period which exists between now and the culmination of the last phase of polls on the 12th of May. This does not suggest that there would not be intermittent corrections during the period. The extent of rise and correction would be market forces and the extent of scepticism about the rally. The entry of retail would be a clear step and event to watch out for. We still have retail participation to happen, followed by a runaway rise leading to euphoria or huge shorts which lead to short covering and then markets peaking for the time being. These events are a long way off and one should enjoy the rally till it lasts. Happy hunting.