Correction time?

From a low of 7,685.64 on October 28, 2005, the Sensex has now advanced 1,001 points, or 13 per cent, in 12 trading sessions to 8,686.65.

On the valuation parameter, Indian bourses are at the higher end vis-a-vis various other global emerging markets. At the current level, the Sensex trades at a PE multiple of 17. The premium valuation commanded by Indian equities is due to expectation of a decent earnings growth of India Inc.

After this big recovery, a section of the marketmen are expecting a correction in the market. A slowdown in FII inflow may trigger correction on the bourses. Though FIIs continued to mop up Indian equities, their inflow slowed down last week. The cumulative FII inflow for November 2005 till November 17 aggregated Rs 1,687.90 crore.