The Indian Stock Market has been recovering from the fatal crash on September 16 till date. The current situation can be termed as stable with the market hovering around 15, 000 points in Sensex and the National Stock Exchange is jumping around 4500 points. Other foreign stock exchanges also have just started recovering but many are still pretty bent out of shape.
Even though the current situation is no where close to the sessions before the crash when the markets were at their prime and trading at more then 20,000 points. But still the rumours of overvaluation are abound in the market. The current economic conditions in the market are not exactly all sunshine and flowers with the actual Consumer Price Index in double digit figures and the national debt and deficit ricing at speeds which are going to break many necks in the coming days and months.
The monsoons have also showered much less then expected and this years Kharif produce will not make Mr Pranab Mukherjee any happier. This will lead to a decrease in agricultural production and its growth. The kind of problems being faced by India will make anyone's head spin but hey we still got strong stock market. There are clear signs again that the good market run is being fueled by speculation and not actual facts. Another bubble is being formed and will do what the Global Financial Crisis could not do to the Indian markets.
There is little sign that the companies underlying those shares that are pushing the stock markets skyward will boost their profits anytime soon. This a delicate situation which might bring home the gold for the country or destroy the already domestic economy. With scintilla revenue growths, suggests that along with many other things, demand growth in the domestic market is very sluggish. Yet the markets are up by 60% and BSE top gainers breaking old records and making new ones.
Overvaluation seems a credible justification to the current events unfolding in the Indian stock markets.
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