It’s raining cats and dogs on a scorching summer day. Beautiful bubbles every where, bursting in seconds creating a mind-blowing atmosphere. Scarce are those who don’t love that beauty. A temporary halt for many in the pursuit for unknown!! Is that what was happening for the last one week in our country? Let’s have a look! The people of India took a bold decision to bring in a stable government at the center, if otherwise could have created chaos in our economy. Now everyone from the farmer to the top guns of the financial institutions hope for the revival of economy. The bubble that occurred in our stock market last week could well be the indication of it.
We will look at what has lead to this bubble. There were cries for more reforms particularly in sectors like retail, insurance and aviation. These reforms were put on hold due to the pressure from the socialist people during the last tenure of the government. But with the formation of a stable government there are indications that liberalization of these sectors will be revisited. This has lead to the rally of aviation, retail and insurance stocks pushing the Sensex 2000 points on a single trading session. The Sensex reached it upper notch three times and the authorities have decided to halt the trading for the day. This is the first time in the history of any stock market that the trading has crossed the upper notch with in seconds. The second reason was the hope for disinvestment in the public sector. The last reason was the increased confidence of foreign investors in the Indian market. Last two month alone have seen an inflow of 3 billion dollars into the market. One of the top financial institution Moody have increased the growth forecast from 5.5% to 7% for the current financial year.
But who all benefited from this bubble? The out-performers were ULIPs and SIPs which saw the unit values going north bound in a week. In last two days investment banks saw the requests for fund switching piling up. We are now not in a position to predict when the bubble will burst even though we have seen profit booking happening in large chunk. But the market is all about these mesmerizing bubble which pulls the investors towards it.
We will look at what has lead to this bubble. There were cries for more reforms particularly in sectors like retail, insurance and aviation. These reforms were put on hold due to the pressure from the socialist people during the last tenure of the government. But with the formation of a stable government there are indications that liberalization of these sectors will be revisited. This has lead to the rally of aviation, retail and insurance stocks pushing the Sensex 2000 points on a single trading session. The Sensex reached it upper notch three times and the authorities have decided to halt the trading for the day. This is the first time in the history of any stock market that the trading has crossed the upper notch with in seconds. The second reason was the hope for disinvestment in the public sector. The last reason was the increased confidence of foreign investors in the Indian market. Last two month alone have seen an inflow of 3 billion dollars into the market. One of the top financial institution Moody have increased the growth forecast from 5.5% to 7% for the current financial year.
But who all benefited from this bubble? The out-performers were ULIPs and SIPs which saw the unit values going north bound in a week. In last two days investment banks saw the requests for fund switching piling up. We are now not in a position to predict when the bubble will burst even though we have seen profit booking happening in large chunk. But the market is all about these mesmerizing bubble which pulls the investors towards it.
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