WHETHER INDIAN MARKET HAS SUBSTANTIAL UPSIDE ? ? ?

i have looked at this point from two angles which are elaborated below -

1...
most of the major world markets topped out in oct 2007. at that time we were around 5400 nifty level. thereafter we continued to move up - the reasons like a large business house / FII / local brokerages cartel etc have been explained several times - by another 900 points.

THIS WAS A CLEAR BUBBLE AND SHOULD NOT BE CONSIDERED IN FUTURE DISCUSSION.

we hit a level of 4700 couple of weeks ago and the the protagonists of unbridled bullish fervour were then predicting 'kissing of the old high' of 6300 etc etc. we were just about 15 % away from a realistic high level of 5400 which was prevailing when the world markets secularly topped out.

THAT IS WHY I WAS ALWAYS VERY SKEPTICAL ABOUT ANY FURTHER UPSIDE IN IMMEDIATE FUTURE AS IT WOULD HAVE BEEN GOING AGAINST THE GRAIN OF MY THEORY OF 'COUPLED RESONANCE'.

the movement in last 2 weeks including yesterdays fall has corroborated my viewpoint / predictions.

2...
if you compare the performance of our market with other major markets, a few things come out -

A... except china all other markets have underperformed by nearly 25 % over one year time frame. india and china are more or less at the same levels - 10 % above year ago levels.

B... over a two year time frame, all the world markets are down by 35 to 40 % . china is down by about 20 % and india is at same level which prevailed two years ago.

C ... over longer timeframe like 5 yrs, the outperformance by our markets is even more pronounced.

the above points bring out that we have outperformed every other market by nearly 35/40 % over one year and two yer time frames (except china ).

DOES THAT LEAVE ANY TANGIBLE CHANCE FOR FURTHER OUTPERFORMANCE ? ? ?

i feel the answer is a BIG NO as we are now fully coupled with international economy ( which we were probably not 5/7 yrs ago - remember in asian currency crisis we did not have much problem.) and we have hit the limit of outperformance already.

generally this percentage will come down as the euphoria about a particular even based reaction wanes and that is what we are already witnessing.


now let us consider both angles presented by me collectively and you will see that it is going to be extremely extremely difficult to breach the wider range of 3700/4600 - ON OUR OWN . we will need some external impetus like dow crossing 9000/9500 zone convincingly etc.

the strength of our economy / single party govt etc may not be enough to break the range on the upside. however these two points will help us in cushioning any severe fall that may happen in the world markets and restrict the damage to the lower end of the band of about 3700.

i was waiting to put forward this hypothesis but i delayed it purposely since the marketmen were in euphoric mood and they would not have listened to any contrary but sane viewpoint.

i will appreciate your comments.