Market worries loom large

After a solid surge in the past few months, concerns of high valuations have come to the fore. UBS Investment Research said in a report on Monday that the Indian market was within 4 per cent of becoming the most overvalued market in Asia. What’s more, fiscal indicators given in the first quarter review of the Finance Ministry raises several concerns over the deficit levels.

However, measures announced by market regulator Sebi last week are expected to cheer retail investors. They are expected to benefit from the Sebi move to maintain public holding at 25 per cent and reserve more quota for mutual funds in IPOs.

But concerns of high oil price continue to dog markets across the globe. Oil price hovers within striking distance of a record high of above $68 a barrel. High oil prices will impact the economy directly and indirectly, fund managers say.

While FII inflow has slowed down, liquidity with local mutual funds remains strong. Mutual funds are getting fresh money and, quite a few mutual funds have launched new equity schemes in the past few days. A correction gripped the market recently when the Sensex plunged 247.53 points or 3.1 per cent in five trading sessions to settle at 7,612 on August 24 from a lifetime closing high of 7,859.53 on August 17, 2005.

Volatility is likely to dog the market again. The market showed huge swings last week on alternate bouts of buying and selling.