The Bombay Stock Exchange saw a seesaw of over 1000 points on Gujarat poll result day when it recovered from 750 points down to venture into the green to the delight of punters who dared to put money when the chips were down and out. It was a remarkable recovery when the market capitalisation of the economy had tumbled to lakhs of crores of rupees and it certainly was not a day for the weak hearted. ‘Buy when everybody sells and vice versa’ is the golden rule of the stock markets to mint money and those who obeyed this idiom did laugh their way to the banks.
However, now that the poll results are over, it is back to basics and everything would boil down to how our economy performs in the near future. Government will have to get the basics on GST right as it has hit most companies. Unemployment will have to be tackled on a war footing and inflation checked and controlled in the days to come. Liquidity is certainly fuelling a rally in stocks but that is too good to last and the bubble can burst if growth of the economy suffers. Long term India story though looks good and we can expect steady rise in Indian markets after a meaningful corrections once valuations come to real terms and rise steadily from thereon!
(The views expressed by the author in the article are his/her own.)