Festive boost to market engine
The spring in the feet of our hitherto halting, pudgy market and stock exchange can be attributed to the cheerful times, without a doubt. The Sensex hit an all-time on Friday and foreign buying went up, effecting a brilliant turn around in the state of the matters. The occasion of Diwali, always a fantastic time for buyers and sellers since everyone wants to indulge in some retail therapy during these days, is of course a good medication for the previously ailing fiscal body of the nation and helps dissipate the looming threats in the investor confidence, restoring the credibility of the Indian market. With the stock exchange surging to a lifetime high on Friday just after the opening bell, smashing its earlier record of 21, 206 which was set in January 2008, the mood of the nation has been rightly fired up by the sound and sight of the bursting crackers, with light and smoke creating a glorious mist of economic transactions to perk up the financial face. This has also been made possible because of sustained inflows from foreign investors, who have collectively driven up the Sensex, pumping in over Rs 18,000 crores into the system over past sessions. Moreover, the RBI governor Raghuram Rajan has batted for the middle classes, keeping an eye on inflation and desisting from unleashing measures that might prove too experimental for the conservative health condition of our economy.
Nevertheless, the festive cheer to the markets, with escalated trade and commerce levels, doesn’t mean that the spur is here forever without regulations on the part of the RBI and injections of foreign capital into the system. It is good to exercise caution at this juncture, although short-term exuberance would do well to bolster the economy during this season. In any case, the behaviour is far from bullish exactly, since corporate profitability still remains a questionable point. Despite the hike in export levels and the extended monsoon, that have together helped stabilise the sinking rupee, even though price rise, particularly inflation in the rate of staple vegetables such as onions, has been driving a wedge through consumer happiness, the mood of the nation needs more booster doses from the political and regulatory fraternity. It is true that markets behave in a more confident manner, given the pre-election drive to improve investments and the coming of the long-drawn season of celebrations lasting the whole of winters. The coming months will also see rise in spending as far as the common man is concerned, thereby pumping in more money into the system. Travel, tourism, culinary and hospitality industries will also register significant yearly profits, and the next quarterly growth would certainly be a handful. In addition, the spur can also be attributed to the fact that the US fed taper has been postponed and the harsh glare of the threat has been taken away. Moreover, in the pre-poll season, money will be lavished on both the parties and the constituencies, and a commerce-friendly ambience will be the hall mark of the times to come. Clearly, increased liquidity in the system would bring in the much-needed smile on the face of the economy.