23 April, 2021

The Beast Has Brains

Everyone's got a theory on the zooming Sensex. And if it has a mind of its own....

The Beast Has Brains
There's always a deep-rooted logic to explain the seemingly irrational behaviour of stockmarkets. In the end, it's a volatile mix of sound sentiments and abundant absurdities that drive such states of euphoria. With apologies to Mark Twain, most market movers first get the facts, and then distort some of them to justify the rise or fall in stock prices. This fundamental truth is also applicable to the almost non-stop bull run in India, where the BSE index, the Sensex, has almost trebled to 13000 points since the UPA government assumed power in May '04.

Early this year, the Sensex surprised analysts and experts by crossing the psychological 10000 points barrier. Immediately, the smart operators who had been predicting a "sharp correction" for some time came out with their reasoning. They said that apart from the fundamentals of the economy and encouraging corporate results it was the liquidity surplus, or huge sums available with foreign and domestic investors, which was pushing up prices. That's why, they reasoned, almost every scrip...

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