My reading of the market is that, it's still early days to comment on change of trend. The broader uptrend is still intact as long as the Nifty holds on to, say, 8950. Till then, the market will gyrate up & down and every correction of say 5% (like now) will be a "buy on dips" opportunity. Except geo-political factors, there is no major change in/concern to the economic fundamentals both in the U.S. & India. Further, liquidity is in surfeit and RBI is not proactive to sterilize the excess liquidity in the economy. As a result, equity still remains "the best in class" asset/ investment. What we see in India today is deflation and it may take some time for the tide to turn around. The informal economy (about 40%) is in a moribund state due govt.'s drive on black money and the economy is undergoing a much needed structural change. Anticipating this, the market has moved up much ahead of the fundamentals. Given the above, the present correction is long overdue from a valuation perspective. In the short-term, I expect the market to stabilize around 9750 in the Nifty and trade sideways in the 9600-10,000 zone.

Contributed by Sh G R Chari