Sense and Sensex

I won’t pretend I understand anything about finance and markets, or that it interests me particularly, but there is something that is bothering me.

There was recent media euphoria about the Sensex touching 8,000. This is, I’m told, about 3,000 points higher than it should logically be. Now, I’m sure 8,000 is great—yay! bring out the champagne, let’s have a party—but HOW did it happen?

This is predominantly an agricultural country, and the monsoons have been a disaster and the crops have failed this season. How can the economy be on the rise despite that?

Admittedly, I’m not clever enough to have come up with this myself. It was pointed out to me, but I still don’t have an answer. Be grateful is someone clarified, though.

~PD

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3 Comments

  1. Nimish

    Reply

    Add to this the fact that most of the Indian companies are not listed on the stock exchanges and you have all the more reason to wonder what the euphoria is about. The problem with most of our idiot economists and business analysts is that they forget that even the Sensex is affected by the laws of gravity – the ruddy thing is due to come down. One only hopes that it does not crash!!!

  2. Reply

    Can’t claim to understand much, but from what I gather India is one of the top performing economies in Asia right now. A lot of the money being pumped into the Sensex is by foreign funds, especially Japanese and Korean funds. ergo the up, up, up and away status of the sensex. I believe (but am not too sure) this is also what is called hot money–money that is liable to flow out as quickly as it comes in. But as long as we have an economy that is booming, the money should keep flowing in and the sensex shouldn’t crash. I just want real estate prices to crash. I am praying for that. I suggest we go beat up builders if houses don’t get cheaper 🙂

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