Sensex north bound

Despite several brokerage firms expressing concern over the valution of the indian stock market any fall of any magnitude only seems to be a correction. after a fall of nearly 30% the benchmark index has again risen by 25%. the concern over valuations does seem to be fair ones boz of the following reasons

• growing current account deficit
• high fiscal deficit
• rising Fed rates and the tightening of the domestic liquidity
• domestic infrastructure constraints
• high PE multiples
• future earnings prospects of indian co's and many more

But Indian story also has many positives

• staggering domestic growht rates
• demographic change
• new age indian industries specialisaing in the sunrise industries sich as IT and Pharma

the list goes on....

indian equity market has some unique offerings compared to other emerging economies and other asian neighbours. the equity market is stable, supported by stable financial institutes and market regulator SEBI.

the ownership ratio of the market shows diversified interests. the foreign participation has gone up at the cost of retail.. the domestic mutual funds hav mopped up huge amoutn of money through launch of new funds. the structure of the market still needs structural changes, many of which are already underway. but more important and more difficult reforms have to be taken at a broad level. but the mood of the street on the reform front is not that great bcoz of the coalition nature of the government. Lets wait and see.