Is SENSEX heading towards 11000?

SENSEX crashes 600 points. SENSEX is down 2% last week and even today it crashed. So do we heading to 11000? Answer for this may be YES. but why when Investors in the world are still bullish on India. Economist says India is shining. So why we think SENSEX is going down? Their are many reasons for this.

One of them is Global crisis. US economy is really in a slump. With US, European economies are not doing well. In India, Maximum investment is coming from US. When US is doing well they need money to keep them up their. just 6 months back US investors have invested $20 billion in Indian market. As we see US economy is open so money rotation is very high. If a small investor looses money it affects all who comes in his contact. so if one investor makes loss in US market he needs to recover his money from some other market and Indian market is the market which has shown fantastic movement and he will recover his money from Indian market and he sell millions of shares. Which creates panic in small investors in India and they will start selling their Shares and which affects Market badly.

The other reason for SENSEX loss is Global Crude prices. As this prices are surging up Inflation rises which results in high CRR and High repo rates which increases loan rates in the market which reduces profitability for companies. Which creates pressure in the market. Prices of this company shares are going down and investors start selling which brings SENSEX down.

Other reason for this SENSEX going down is very strange and when we think its obvious. When crude prices are surging up People start investing in Commodities such as crude. To invest in crude the investment require is 6Lakhs for 100 bbl. If we take 5% profit on this it will make 30000. And in these condition profit of 30000 is good. So investors start investing in crude and selling Equities. Which results in negative trend as far as the SENSEX is concern.

So it means SENSEX will surge further and it will reach 11000? Answer is NO. Reason is that, India is still shining. If we check last year foreign investment has gone up by $4 billion. Investors are bullish on Indian Economy. As fundamentals of Companies in India are very good. Majority of the companies are making profit in such crisis conditions. and this very good sign for the economy. Yes their profitability got low but still they are doing good then their counterparts in other part of the world. RBI and government is still saying that we will achieve 8% growth so this means it is a very good sign for the Economy and SENSEX.