Sensex drops 153 pts on profit booking, ends below 21K

Profit booking stepped in on Monday, soon after the Diwali celebrations by markets worn out in the previous three sessions. The Nifty had held the 6,300 level and the Sensex 21,000 mark last week but the indices retraced from these levels today because of sell-off in financial, technology, PSU power, telecom, capital goods and auto (barring Tata Motors) along with ONGC and ITC.

Overall, the markets were in consolidation mode today, which was imminent after strong rally, because on the other side, buying was seen in heavyweights like Reliance Industries, Tata Motors (ahead of results tomorrow) and HUL along with cement, healthcare and select metal companies' shares.

But overall experts looked confident after their predications came true that equity benchmarks had closed at all-time high last week in Diwali. UR Bhatt, MD, Dalton Capital Advisors said that as long as capital flows do not reverse in a great hurry and if they continue to flow in, markets may see 5% upmove by the end of this calendar year.

Bhatt explains that there is a lot of appetite for Indian equities as of now partly because of QE2 and partly because of exposure that India is getting on account of the US President's visit. Also boosted by strong earnings, the markets are likely to touch an all-time high by tomorrow.

A Balasubramanian, CEO of Birla Sun Life MF says the mood is positive. "Diwali has been definitely better than what we have seen in the past. Whether with the respect of the one economic growth is coming back and second is consumption behaviour is changing; even the real wealth effect in the country itself has been on the rise. Per capita income has been definitely on the rise compared to what we have seen in the last few years.

On top of it, we have also seen the global investors continues to repose confidence on India with respect to what we are compared to some of the global economies. Earning season is still on, we have been seeing out of about 2,000 companies, 1,800 companies have reported growth in excess of about 20% both in the topline as well as in the bottomline. I think all indicated towards positive vibrants towards market."