Government seems more committed to take the reform process ahead.

It seems UPA govt after winning vote of confidence, looks very strong and determined to do all what they were not able to do during last 2-3 years because of Left Front. Stock market has already given a thumps up to UPA and reform in the Banking, Insurance, Agro etc will lead to further rise in the stock market.

Views below are from Madhu Kela, Head-Equity Investments, Reliance Mutual Fund.

• After a strong rally there is a bit of profit taking which will happen. Since we have seen such a significant correction in the market, which lasted for seven-eight months, this is going to give us a bit more pain in terms of time. So one should not expect that all is well, everything should be forgotten, we are back in the bull market and are going to see a new high in a hurry.
• If the markets have to have a meaningful rally in the long run, then they have to spend a lot of time here. We will see this kind of fizzling out and the market is going to test the conviction of a lot of people before making the big move.
• One would hope that in this period maybe the Nifty would trade between 4,000 and 5,000 for sometime till the volatility ends. That is when the more stable money will get more confident and one will see gradual investing by larger players to come in.
• What one is reading in the press over the last one week is that the government seems more committed to take the reform process forward. All allies are also speaking the right language. So, I am much more upbeat about policies to come from the government over the next six months versus what has happened in the last two-three years.
• In nutshell, peaking of inflation and softening of interest rates are the key triggers for this market.
• I will stay with banks. I am quite hopeful that we are not going to see significant tightening at least over the next two months, given falling crude prices and given that our central bank had already acted in anticipation. We have been tightening since the last 18 months. We are not going to see any significant tightening over the next two months. I would stay with high growth companies and more towards private sector banks because they have seen significant corrections and are available at much more reasonable valuations as compared with their peak valuations.
• There is a low probability of the Nifty going below 3,800 in a hurry. We have to now look at some sort of catastrophic event for the indices to go significantly lower than what we had seen. Many stocks have corrected 60-80%.