5 reasons why stock prices are rising
The Sensex gained almost 1,000 points last week. Experts expect the rally to sustain. Here are five reasons why stock prices are defying gravity.business Updated: Mar 10, 2014 17:48 IST
The Sensex gained almost 1,000 points last week. Experts expect the rally to sustain. Here are five reasons why stock prices are defying gravity:
• Investors, led by FIIs, are expecting Narendra Modi to lead the NDA to victory in the coming Lok Sabha elections. Such a government is expected to be more business-friendly than the current administration.
• Indian economy seen to have bottomed out. Investors expect growth rates to pick up in 2014-15.
• Indian growth rates, though at a decadal low, are still higher than all other large economies barring China. Hence, India offers FIIs a relatively better investment opportunity than other markets.
• By bringing CAD and fiscal deficit numbers umder control, finance minister P Chidambaram has signalled that he will not allow poll season populism to override hardnosed economic decision making. This is giving investors confidence to bet on India.
• Since 1991, the Sensex has always risen sharply in the run-up to the general elections. That trend is holding this time as well.