Wednesday, February 08, 2006

BSE Sensex at 10,000 !


At last the share market has crossed the 10,000 barier, sending a sense of euphoria amoung brokers and investors accross India. No one could have predicted that the markets are going to hit the 10,000 mark so early in this year. This pre-budget rally is notable because of the strong fundamentals of the Indian Business and Economy. We have seen many bull markets in the last two decades. The bull phases of past are scarred with broker manipulations, corporate or invesator greed, promoter broker nexus etc. There was a lack of transperency in both the Corporate India and in the stock exchanges. This lead to times of extravagant valuations that only lasted for brief periods.


But this time it is Different ! The sensex has crossed many marks before. This time crossing of the 10,000 mark did not happen in a sudden spur but in keeping with a resonable rate of progression. Therefore, the Sensex now reflects the true state of Indian economy. The uplifting sure of confidence in the India Story, and the expectations of future performance is the real hero of the rally this time arround.


The FII (Foreign Institutional Investors) interest in India is due to the strong macroeconomic treands forecated by outsiders. The investors are now confident of the regulatory framework of the stock exchanges and regulatory body like the SEBI (Securities Exchange Board of India). The market risks are now minimised by the expanding of the depth - marked by more than 100 large cap stocks, emergence of new sectors, and wider mid-cap stocks. The small caps of yeasterday are becomming the midcaps of today and similarly the mid-caps becoming the large caps.


The Corporate India will face a tough task of meeting the market expectations for at least next few years. We have seen a strong bull market for the last few years with the markets growing a few folds. Now the investors must prepare for moderate to heavy corrections expected after such long runs. We must not lose hope during such corrections and stick to the long term investment phillosphy taught by investment gurus like Warren Buffet, Peter Lynch and George Soros.