–Nearly three-quarters of traders in India (74%) expect the Sensex
to rise further
–A staggering 36.5% believe the Sensex will be over 15,000 by 31 December
–Fewer than 1 in 5 traders believe the Sensex will fall below 11,500

Almost three-quarters of traders and investors in India expect the
Sensex to rise further, according to research conducted by the
Technical Analyst magazine in the run up to its conference in Mumbai.
Of these, just under half thought the Sensex would be over 15,000 at
the end of the year.

The research also reveals a difference in sentiment between private
and institutional traders, with institutional traders slightly less
bullish, i.e. 12.5% of institutional respondents expect the Sensex to
be below 9,000 compared to only 4.6% of private traders. At the other
end of the scale, there were no institutional respondents who thought
the Sensex would be above 20,000 at the end of the year, compared to
3.1% of private respondents.

Overall, the results show that the market is heavily skewed in its
expectation of a market rise. Matthew Clements, editor of the
Technical Analyst magazine, commented, “On the face of it, this would
seem to be good news for the Indian stock market. Traders and
investors however should be alert to any over-extension of the market,
when the overwhelming majority of market participants, especially
private individuals, are bullish. In such circumstances, who else
would be left to buy into the market? Such extremes of market
sentiment, often in combination with other analytical techniques and
similarly over-extended fundamental valuations, can be good clues to
an impending counter-trend or major price correction.

“In order to draw meaningful conclusions, we need to know the
relationship between the Sensex Survey and the market and we will need
more than a snapshot to do this. As such, we will be continuing the
Sensex Survey on a bi-monthly basis, thus providing a useful gauge of
market sentiment.”