Why is the Indian stock market racing like mad when all economists are predicting bleak economic figures?
Racing like mad?
Its just up 18% in one year.
Market scenario is not the way it was 10 years ago. As i always say, there are 2 important numbers that are important to define a stock price. One is EPS and the other is PE ratio.
EPS is a know factor. It is derived from the Quarterly results.
On the other hand PE ratio is the real value of a stock. It is the price which investors are ready to buy a stock. PE ratio can rally due to good market Outlook, liquidity, stable government, good monsoon, etc.
Current rally in the market is supported by good liquidity, 5-10 years back whenever there used to be a bad news domestically or globally, the FII used to sell in the market and the market used to keep hitting monthly lows. Currently the flow of money from Indian household into mutual funds has increased well. This fund is supporting the Market on the downside.
This liquidity is helping the market to stay above the resistances and will also keep helping the market hit fresh highs every 3 months once for next 3 to 4 years atleast.
This is screenshot from Stockedge APP on FII selling:
But the market will keep hitting fresh highs due to this picture below:
(Support from DII)
Please share and comment your thoughts on the Indian stock market.
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