One of the market experts says that the sensex at 16000 is not so expensive, but the market at 20000 would definitely be expensive.  Let us go in detail what the expert says.

Is this a bull market?

We can not come to a conclusion that this is a beginning of a long bull market rally, as the smart money is yet to come into the markets.  There are lot of investors, sitting with a lot of money to enter the markets on the correction.  A strong bear market rally is expected in near future which is followed by a very gloomy mood in the markets.  There after, the bull rally begins, which would be an ever strong one.

What is short term outlook?

The short term trend is really positive as well as surprising.  On each rally, investors need to be cautious on booking profits and taking out their money out of the markets.

Which sectors are looking good?

The investors are mostly interested in mid cap stocks.  For the short term, the commodity stocks look very expensive.  Power, Insurance and Consumer durable stocks are still looking attractive for investment.  The investors should look for opportunity to buy these stocks on every dip or correction.  Though it is not a good time to buy the power stocks, the power sector looks very much promising and has a bright future.

Present Valuations:

May be EPS at present, around rupees one thousand and PE at 16 is not looking so expensive but the markets at 20000 would be very expensive.

Which factors influence the markets?

Crude Oil, Natural Gas and Rupee are the key factors to watch out.  The prices of all the three are fluctuating so sharply that every moment of each is strongly influence the market conditions.