Wrote it some time earlier...

Rise of Sensex: Are you watching

Light travels at the speed of 3lakh kilometers/sec. It seems nowadays even sensex is trying to compete with that record. Within a year the rise of sensex has been phenomenal. With FII's and even the retail investors pumping in more and more money the market seems to be growing like an exploding star. But, there is always a 'but' to things that we dont understand, i started thinking why did sensex rise to this height within such a short duration. Its a very obvious to question and would be beleaguring your mind too, however most of the people like to enjoy the ride and do not ask such question because it makes them uncomfortable. Even i am uncomfortable asking this and i too would also like to leave all this and sit back and enjoy till it lasts, but when i see around me i find people, thousands of people putting in their money (hard-earned or otherwise) into this blackbox hoping that they'll reap better returns than what they used to get from other avenues. This uncomfort has driven me to look into the situation a little deeper to analyse what has caused this sudden goldrush in the indian market, and why did it happen now, who will be the beneficiary, and ultimately to see if it will last.

Experts say that this rise has strong fundamentals, but i dare to ask what makes these fundamentals strong and why weren't they strong a year back. Firm's profits have not increased by the same or similar amounts by which their stock values have risen. Even the returns expected from the firms have not increased by the same multiple. Then why did the stock values rise. Will they continue their rise even into the future, or Dow will prove to be a breaking upper limit

We know that the Value of an object depends on the person in whose hands its present. It may be so that FII's see a higher value in indian stocks than the indian investor, so the question is 'Is the present rally solely driven by FII's, who is the primary driver and who are the supporters', 'Are the current valuations actually the company values','what is the basis of these values'. I ask these questions because finance fundamentals cannot change in a day.