Nifty not likely to break past all time highs

Argument – Commodities prices are falling, inflation rate diving down, RBI to cut rates, Indian growth story still not dead, Nifty to break all time highs and venture into unseen territories.

Expectation – Stocks that are based on Indian growth story to move into uncharted territories.

Reality – Leaving apart the defensive's and most of which (leaving apart FMCG stocks) do not rely on Indian growth story venturing into uncharted territories

Further observation – If the Pharma, IT, FMCG companies are trading at all time highs they might be because they are not expensive when related to the growth potential. But that doesn’t stand to be the case, they have given whopping returns in the past and have been running atop on future expectations already built in. The stocks trade at PE of above 40’s and even 70's (Trailing 12 months) and the growth potential seems to be weakening. What the reason could be? Obvious reason seems, institutional investors want returns for their investors, being trading others money they can be greedy but not fearful of loosing the hard earned money. In search of returns they venture out buying stocks which are holding the cash in their balance sheets. The Pharma, IT, FMCG fit the bill.

Conclusion – Nifty likely to be rangebound in short to middle term unless and until growth stocks start moving up. Till then it’s a market wherein institutional investors and the Govt wont let the market fall, while the market itself lags the energy to move up.