In a race between economy and stock prices, the economy always lags and the stocks always lead, as they are moved by expectations. This was observed recently in the stock market rally as the markets expected Modi led BJP to win and the economy to prosper.
Sensex rose by 6% recording a high of 25375.63 and the total market turnover was Rs 4.83 lakh crore, the third highest ever, on the hopes by both foreign and local investors that BJP reforms will revive the Indian economy. FII’s have invested nearly Rs 32,000 crore in Indian equities and debt in June 2014. The rupee also strengthened to 58.62 per dollar, its highest since June 2013.
The Modi wave which every Indian talked about is also evident on the Sensex which is currently in the 3rd bullish wave, which is the most violent wave, according to Elliot wave analysis, a technical tool.
Now, is this just a temporary euphoria or a long lasting change? If it would have been a bubble, then there should have been some small signs of its bursting, but as we see the changes made by the present government are at the grass root levels, this is definitely taking India on the path of growth and prosperity, making India a strong and a lucrative global investment destination.
The inflation (CPI) eased to 7.31% in June 2014 from 8.28% in May 2014. Quarterly GDP growth rate increased from 1.1 to 2.10. Manufacturing Production in India increased to 4.80 % in May which was -3.6 % in Feb 2014. All these figures are not merely because of sentiments, there is real change taking place. The government is going through a step by step approach to bring India from troubled waters to safe shores and then let India prosper on a new economic base.
If the current government continues this performance, then in no time, India will have its best years which will be evident not only in numbers but also as smiles on every Indian’s face.
-Mitul Dharawat
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