Market-watchers will recall how following the surprise defeat of the NDA in the 2004 Lok Sabha poll, Sonia Gandhi sprang an even bigger surprise by nominating Manmohan Singh as prime minister. Sharp turbulence in the share markets followed. Because the UPA government was Left-supported, markets feared the finance minister in the Narasimha Rao government would have to tailor policies which would hurt the sentiment. Probably, in that sense markets are better readers of the political trends than some of the political pundits writing about them to earn their daily bread. Anyway, soon the late CPI leader, AB Vardhan, famously dispatched markets to hell — “markets jaye bhaad mein”. One recalls this episode from our recent past only to put in perspective the recent excitement of the Nifty-50 crossing the 20,000 mark. The bellwether index still seems to have a lot of energy left in for it to cross many more milestones before it pauses to catch breath. Of those as of now there seems to be no sign yet. And the bulls will hope that the sky is the limit, should everything remain in place. Right now, everything seems to be. India has just conducted a very successful G20 summit where Prime Minister Narendra Modi garnered glory for self and the country. At least three opinion polls have predicted Modi’s return for a third successive five-year term. Above all, foreign investors find India attractive, especially for want of a better market among all the other emerging economies.
The rapid adoption of the China-plus-one policy under which iconic companies are dividing their manufacturing/assembly plants in India is beginning to already bear fruit. For the first time, for instance, Apple will release its latest phone simultaneously in India. Add to the mix the unrelenting investment in big-ticket public infrastructure. And markets have their reasons to feel buoyant. Besides, consumer demand after the sharp drop in the Covid period is showing signs of a certain pick-up. And with the festival season approaching, consumer spending can only increase. The last indices available for manufacturing, including automobiles, were healthy. The auto and real estate sectors are now on the upswing after the recent lows due to financial crunch and slowdown triggered by the pandemic. Meanwhile, market experts are not surprised that even the mid-and small caps have joined the bull run which is also reflected in the dud shares hitherto going abegging in single-digit valuations now quoted at several multiples of their price. As they say, when the river waters rise, all boats rise. Also, the domestic investors are growing daily, evidenced by the lakhs of demat accounts opened every week. Middle-class savings are being channeled into professionally-runsystematic investment plans. The equity culture is deepening. Lower income groups no longer put their savings into share markets. The formation of the Securities and Exchange Board of India as the market regulator has reassured even the faint-hearted that mischief-makers will not go unpunished.
Meanwhile, buoyancy in markets inspires fresh investment, eventually broadening the markets. New issues by promoters to capitalise on the positive sentiment gather momentum when the Sensex is rising. Given that the public sector companies too have rewarded the shareholders in distributing record dividends is proof that the bull run is supported by positive factors. Not every share market reader can be so wrong that none will take heed to safeguard his investment. Also, if there is no mad rush to cash-out and reap the gains of the peak Sensex then there does persist the popular belief that there is still a lot of steam left in the Sensex. Of course, no market pundit can predict the peak and the plateau of the Sensex, regardless of the professionalisation of the sector with highly qualified researchers poring over the fine print hidden in annual corporate reports. An element of speculation does enter the equation, which of course is how it should be, otherwise entering and quitting the market will become a mechanical exercise. But so long as it goes up punters should feel free to enjoy the ride. Their happiness in many ways holds the key to India’s continuing growth story.
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