India’s stock markets have been on a high of late, more so in the past week when what they saw as good news in the BJP’s Uttar Pradesh triumph and the “dovish” US Fed hike helped fuel the rally to record highs. It’s a moot point if a bull market’s onset signals economic expansion or markets simply tend to follow the figures, like the GDP projections by the Central Statistics Office. While the jury is still out on whether the economy is in an expansion phase or in a trough in the wake of demonetisation, and a parliamentary panel is quizzing the CSO on its projections, the fact is equity investors, notorious for seeking bad news, are in fact seeing good news everywhere.
US Fed rate hikes often cause distress in Indian equity markets as FII investors might move funds. But optimistic sentiments remained so high that the markets are set to climb on the premise that reforms will accelerate in India. GST’s July 1 advent appears to have propelled the positives. There is more good news ahead: economists see a uniform recovery in America, Europe, Asia and the emerging markets nine years after the economic bubble burst in 2008. The Institute of International Finance reckons that in January the developing world hit its fastest monthly rate of growth since 2011. All signs are good for global growth, but regardless of whether investors are gung-ho or not, we must keep our fingers crossed that 2008 has been left far behind.