The Rs 3 lakh crore Indian equity market appears to be on a history-making journey. It has recently surpassed France to become the sixth largest equity market in the world in terms of market capitalisation. In this sequence, Sensex has also crossed 60,000 while Nifty is looking very close to 18,000.
Market experts say that this rally is not a bubble. There are many factors working to support the market at the moment, due to which it is seeing a rally. There are many reasons for this increase, not just one reason. If we look at different reasons, then this list includes the rapid increase in GDP growth to the increase in the figures of the core sector, the financial situation and all the steps taken by the government to boost demand, different for manufacturing. The PLI being brought for the sectors goes to various reasons like vehicle scrappage policy, increasing expenditure by the government on infra and easy loans to boost the private-MSME sector.
Apart from this, due to the rapid increase in the speed of corona vaccination and the improvement in the corona recovery rate, it is expected that soon the economy can fully open. Along with this, FDI is seen coming into India from all over the world, due to which there is strong liquidity in the market. Due to which the market is putting the high on the high. Thus, along with domestic factors, global factors are also creating a boom in the Indian markets. Indian markets are also benefiting from the global economy recovery.
The auto mobile sector, which is among the first and most affected sectors by Corona, is now looking promising due to pent-up demand. All the companies have started business again. It is expected that the auto sector will see a boom in the coming quarters.
Due to the Indian government’s focus on electric vehicles, it is expected that India may soon emerge as an auto hub. The banking and financial sector, which is called the backbone of any economy, is also seeing improvement. Establishment of a bad bank will be a big good factor for the banking sector.
There is huge potential for growth in the Indian markets. However, from the valuation perspective, the market looks a bit expensive at the moment. Keeping this in mind, it would be advisable to bet only on fundamentally strong select stocks at this time. There should be more focus on sectors like banking, auto, finance.
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