Market watch: Anatomy of a bull run
This bull run may be the biggest and strongest we have ever seen in our history but the level of investor participation has perhaps been the least, writes Udayan Mukherjee.
Wow. That was all I could say at the end of trade on Tuesday. Amazed, astounded, overwhelmed. Am generally of a bullish disposition and a complete believer in this structural bull market--which I try to temper periodically for a more objective outlook--yet am taken aback at the ferocity of this move. On Tuesday, the move was of historic proportions, not simply because the Sensex cleared 18,000 but because it seemed to have shed much of its baggage.
Two years ago, could one even conceive that the market would post its biggest rally ever amid a real possibility of the government being pulled down and mid-term polls? I doubt it very much. Sceptics would argue that this is "dumb" money that does not understand the realities of electoral possibilities. While there may be a grain of truth in that, my feeling is that the markets have moved beyond politics and politicians. Unless it is faced with something as dire as a Third Front government, politics has perhaps lost its ability to break the back of this market. Tuesday may have been proof of that.
The Sensex at 18,000 is on every newspaper this morning. Logically, Indian households should be celebrating, but my guess is that they are not. On the contrary, they would be feeling left out. There is no Harshad Mehta or Ketan Parekh type mass hysteria in the country today. Far from it. This bull run may be the biggest and strongest we have ever seen in our history but the level of investor participation has perhaps been the least. Direct stock ownership is woefully low compared to the bull runs of yesteryear. That is why we have these frequent calls for correction at every higher level and the utter scepticism and disbelief we hear around us. Tuesday’s move is a message to those who are still waiting: the perils of waiting for a dip in a bull market are well documented in history.
Sadly, despite the many falls and pullbacks to higher peaks, this lesson has not been learnt. So, as we look at the market today, along with the elation I feel is a sense of regret that the good old Indian household is still fighting shy of this wonderful bull run and is probably leaving it till too late.
(The writer is Executive Editor, CNBC-TV 18)