The Indian stock market is on a bull run ever since it sensed the capture of power by BJP in Delhi. Both the stock markets NSE and BSE are situated in Mumbai. Everyday the index at both exchanges is registering good gains and shareholder's wealth has risen handsomely. The capitalization by top industries is equally impressive.
ONGC, the government owned and world's number three oil and gas exploration and production company has crossed the market capitalisation of Rs 3,29,343 crore. It is followed by Coal India's M-cap of Rs 2,18,325 crore and SBI at Rs 1,80,245 crore.
In the private sector itis Reliance Industries Ltd (RIL), whose M-cap has crossed Rs 3,49,246 crore. ITC's M-cap has jumped to Rs2,84,366 crore and Tata Motors is at Rs1,21,180 crore.
The Sensex has shot upto its highest ever level of 25,376 points and it isexpected to continue its march ahead. The main reason markets have flared is the expectation that the new incoming government can carry out much delayed and new economic reforms without having to worry about coalition compulsions, as it has got a majority on its own in the Parliament.
The track record of BJP led governments in Gujarat and other states is giving confidence to the share market that the new government will be development oriented and willing to fast track reforms to speed up the processes.
All this augurs well for the country both domestically and internationally. The positive sentiment will help foreign investors to re-look at India and domestic industrialist can look forward to investing again. It will help in creation
The stock markets are a barometer of a country's state of economy. The present daily handsome gains are an indication that there is a wide spread expectation that the economy is going to look up after lying dormant for more than two years.
Already the FII's are pumping in record sums of money into the markets and this is seen as a measure of confidence in the new governments pro business image.
All in all, while the markets are going in the north direction, the small and new investor has to be careful. Indian markets are known to be manipulated by a few and the speculation may be drummed up to an unspecified extent. What goes up has to come down. High risk investors are out to make money.Therefore the common investor has to be very careful and should guard against greed taking over the investment decision in a market which is purely operating on perception of a particular behaviour by the new government.It may or may not match the market expectations.
While the going may be good for the economy, investors have to watch their investment decisions very carefully. The bulls are on the run in the north direction and may soon start returning home in the south direction.