How sustainable is the bull run in the indian equity market?

Question

Last five year shows bull run in the indian equity market.What are the factors responsible for it?

Answer 1

economic groth

Answer 2

1. 8% Economy growth that India is poising
2. Increased expenditure in household
3. Money flowing into equity markets instead of traditional FD/CDs

I'd stress on point 3 right now, as there are numerous article covering the first 2 fo ryou to read. When I was young and saw that my dad got an FD, I was thrilled to hear that somebody would actually pay us more money (principal + interest) when we deposited in a bank. With whomsoever I had an opportunity to interact with during those childhood days, when asked about investing, I was always faced the same answer ... put your money in a bank FD and get the interest.

Off late what is happening is that percentage of monthly savings that get translated into a bank FD is reducing. They are finding newer routes for investment. Example, Mutual Funds, Stocks, Hedge Funds etc. Where money starts rolling in price starts shooting up. It is for this reason that our FM Mr.PC has banned forward trading in certain commodities in order to control inflation (this is afaik).

There wouldn't be a bull ride if there was no economic growth. India is showing signs of economic growth (only in urban areas), since there is something positive happening in the country, the money that has flowed into equity markets are increasing the prices of underlysing assets (stock, realty, MF NAV etc). As an Indian, if I were asked the question is India truly progressing? My answer is negative.

Just because we see 5% of population spending endlessly on booze, partying, cell phones ... it doesn't mean India is shining. There is the rest 95% which is struggling. Remember there are lot of Institutional Investors who still haven't given India an investment grade for their portfolio. FII's are coming in, they are only small percentage of what goes around the world. I will give you an analogy, FII investment around the world is about $300 billion, India gets around $5 billion.

Imagine what if we were to attract higher % of FII investments, where will the index be 40,000!!!??? Possibly yes.

Speculation, is what I think has kept this bull ride!

Answer 3

In all worldwide places there is Bull industry and likewise a undergo industry; frequently bull industry has an prolonged run than undergo industry yet some undergo industry is going down steep. As too lots money flows right into a rustic like India, a raging bull industry starts it somewhat is sustainable for a while if economic device grows with out inflation and money maintains to be. whilst different greater economic device has undergo industry, there's a great danger India could have it.

Answer 4

Where I come from there is an old saying. What goes up must come down. India is growing rapidly. No doubt about it. But the prices of the securities has discounted that and then some. Remember last May? It WILL happen again. It may be happening as I write this. Prices are already off more than a few points.

Answer 5

if one has the nerve to sustain the stock market will never let one down but pl invest in good sensex firms only. at least they are creditable

Answer 6

last hope is 12700

more detail on my blog