Is the bellwether Sensex in the grip of an “irrational exuberance”? Market men don’t think so. It is their genuine belief in the Indian story playing out in the corporate boardrooms coupled with the untiring government effort to grow the economy at a faster clip which has the indices on a boil. On Tuesday, Sensex achieved a milestone, breaching the 75,000 mark for the very first time and hitting a high of 75,124 before settling at 74,684 at the end of the day’s trading. The combined market capitalisation of the BS listed firms topped Rs.400 lakh crores. The rally was not confined only to Group- A shares but was spread across mid-caps and small-caps as well. A day later on Wednesday the Sensex continued to be in good nick, gaining another 354 points at the end of the trading. Buoyed by the incessant rise in the indices, market analysts are banking on excellent quarter four results for 2023-24, for the Sensex to scale further highs, with some hoping that it would cross 80,000 points before the end of the year. The index took just four months to reach from 70,000 to 75,000 points.
A significant feature of the rally was that no longer do the markets depend on foreign funds to boost the bullish mood. It is now the domestic mutual funds which prop up the markets. The record number of demat accounts being opened indicate that the household savings of the middle and lower income groups are increasingly flowing into the markets. Foreign institutional investors have not stopped pouring money into the Indian markets either, but the domestic savers as a group seem to be stealing a march on them. Market culture is spreading to hitherto untapped groups in cities, towns and kasbas alike, as testified by the record opening of demat accounts by banks and other financial intermediaries. Sound market sense alone accounted for the relentless rise in the indices. The recent numbers for the third quarter growth in the last financial year at 8.4% was a big positive. So was the forecast for the full year at 7.6%. The projection of 7% growth for the current year too augurs well for the bulls. Also, markets expect robust corporate results for the quarter ended March 31. Then there is the widespread expectations that led by the US Fed, bank rate across the western bloc would begin to trend lower once consumer inflation in the US comes down a few notches more. The RBI at the last meeting of the Monetary Policy Committee stayed its hand, expecting food inflation to ease a bit more before it began tapering off the lending rate. Above all, markets are enthused by the prediction of policy continuity with the assured return of Modi-3.0. The combined effect of these factors together make for a bullish sentiment. The headline that Tesla boss Elon Musk is due to meet Prime Minister Modi later this month for setting up a plant for electric cars could not have gone unnoticed by the big and small bulls on the bourses.
