Caution advised

Marketmen are generally enthusiastic about the indices climbing to ever higher levels, but some of them have advised caution.

"The situation is still dynamic and anything could happen to upset the apple cart," says a fund manager.

The longest shadow is of rising interest rates and inflation. Says Shyam Bhatt, fund manager with Principal Mutual, "Any further interest rates hikes in the US could adversely impact portfolio inflows. Worse, as the portfolio investors withdraw their funds to invest in their local markets, the outflows from India could lead to declining valuations."

Rising rates within the economy could lead to costlier funds for corporates, impacting their bottomlines and therefore, stock valuations.

Another major worry is crude oil. Though oil prices have cooled down now, there are still apprehensions of a fresh flare-up.

"At the moment prices are down, but they are still high by normal standards," said Nandan Chakraborty, head of research at Enam Securities.

Brokerages are also apprehensive about external events impacting the economy. It could be anything. "Global terrorism is a concern," said Chakraborty, a view echoed by Bhatt as well.

"Of course now that the US elections are over, this also seems to be a remote possibility but one can never rule it out," he said.

The Chinese slow down has been exaggerated to some extent, but still this will have an impact on India but not as much an impact as in the case of the other emerging markets, which have set up capacities with an eye on the China growth.

There are also apprehensions that an appreciating rupee could impact the technology sector's performance in the third and fourth quarters, and this could well send valuations plummeting.