All Valuation Fronts
far from peaking
modity index nearly tripled from 2001 to 2008, to 240 levels. The index is at 84 now, near the lower levels of the past 20 years. Lower commodity prices, particularly of steel and coal, should aid Capex decision making.
The previous rally was dominated by overseas cash, which enters and exits quickly and can be shortterm in nature. By contrast, the recent rally is expected to last longer as it is locally driven, and any significant dip is likely to be bought into. The Nifty, for instance, has not corrected more than 5% in the last 231 trading sessions. In 2007, DII flows were around 30% of the FII flows, while the equations has reversed now. FIIs flows in the current year to date are 40% of the DII flows.