The BSE Sensex crossed the 29,000 mark on Monday, March 6, 2017 on the back of rise in liquidity. The rise is on the expectation that the ruling Bharatiya Janata Party (BJP) will be coming into power in Uttar Pradesh, India's largest state. Today's rise in the equity market was also supported on the news that on the weekend, the GST council approved the draft CGST bill and the draft IGST bill.

While the rise is on back of liquidity, it's time to be wary about the gains in the market and probably sit on sidelines as the market has run too quickly in a shorter span. Any bad news will see a sharp correction in the market.

Next week being a truncated week, with Monday, March 13, 2017 being a national holiday due to Holi, it would be better to sit on sidelines as by then the UP election results would be out. The UP election result comes out on Saturday, March 11 2017. If the BJP government does not come to power in UP, the market will see a correction. Though it's not going to have a major impact on the Indian economy, but it will certainly spoil the sentiment.

The market could even fall on pure profit booking following a sharp rise in the recent past. The BSE Sensex since the beginning of 2017 has jumped 10 per cent from a low of 26,406.53 on 30 December 2016 to 29,145.62 on 2 March 2017.

Next week with the US Fed expected to hike interest rates, it could be better to wait on sidelines. While the market has discounted the news, it could pull the equity market lower on the US rate hike. The two-day US Fed meeting starts on March 14, 2017.

So far it may not be alarming but worries over brewing tension in Asia rose after North Korea fired four ballistic missiles into seas near Japan. In such cases it would be better to sit on sidelines and wait for a clear trend to emerge starting from the UP election results followed by the US Fed meeting.

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