Are the good times back after the benchmark Sensex jumped 3.3 per cent or 561 points in a single day?
Markets saluted a combined aid package from the European Union and the International Monetary Fund to rescue the Greek economy but experts say caution should be the watchword and jumping in for quick gains should be avoided in a volatile market.
While the relief jump in the stock index may be big, all is not over as it still remains to be seen how the relief package works out. With talk that the Greek contagion that hit the euro also spread to other countries, details are important.
“This is just an attempt by the European Union and the outcome has yet to come. We also need to see over the next few days whether more countries follow Greece,” said CJ George, CEO, Geojit BNP Paribas Financial Services.
Experts do not see the big jump as a healthy sign.
“Such sharp movements are not good for the market as similar movements may happen on the other (negative) side too. I think that the markets are likely to remain volatile for some time and investors should remain cautious with their investments,” said Aseem Dhru, CEO, HDFC Securities.
Experts say that this sort of volatility does lure investors to come in and make quick money but that should be avoided.
“Retail investors should not get carried away with such movements and should not invest in these volatile times for short-term gains. However, they can invest, even now, with a long-term approach,” said R Venkataraman, executive director, India Infoline.
Investors got wary of their investments as the Sensex slipped through last week amid growing concerns on debt-ridden Greece. While the relief package does address the immediate concern, it should not be looked at its face.
“The markets are reacting to every news coming... it is a time to wait and watch,” said Dhru.
While the monsoon rains due next month may influence corporate earnings within India, inflow of funds from overseas investors into Indian markets depend on global factors.