Uncertain times

Risk factors dominate market mood

Market sentiment is notoriously fickle and the mood can swing from euphoria to despair without pausing to take the measure of the fundamentals. Such a change occurred in September. A month ago, valuations were close to all-time highs and investors gleefully predicted a continuing bull run. Now, the same people are talking in terms of a long bear market although the Nifty has corrected by just 7 per cent from the record peak levels. Rising interest rates in developed markets, a falling rupee and a widening current account deficit (CAD) in India have induced foreign portfolio investors (FPIs) to sell