Has hit 19k. In the last one month, it has gone up big time. Where it's going/

DIO

It has gone up 3000 points in the last month.

For ready ref check linkz: http://www.canadiandesi.ca/read.php?TID=17249&page=9

It's all recorded on the mighty Canadiandesi site courtesy ....

Aha! But when?

Where it's headed?

How 'bout hazarding a guess?

Maybe you are in the know...who knows?

The Shadow knows...

From India Interacts by S. Gurumurthy/Selvan
STOCK MARKET: S. Gurumurthy
‘The first 10000 took over 20 years; the next came in just 20 months. At $1.58 trillion market cap, India is No 9 in the world. Superpower 2020?’ This is how a leading financial daily editorialised its news on the Sensex touching 20K on October 29. This Sensex hyping is not the isolated endeavour of one newspaper. This is fast becoming a media, even national, obsession. It seems a collective effort is on to define the Indian economy through the Bombay Stock Exchange’s Sensitive Index.
A day’s setback in the index drives the Finance Minister to the TV screen to say things so that it goes up again. The Sensex makes money on paper for all stock market clients. Those who properly time their entry and exit into and from the market even encash it, of course with some luck. But how will the Sensex surge make India a superpower by 2020? The media claims that the Sensex has driven the nation’s wealth to over $1.5 trillion! These banner headlines do not feature just in financial dailies whose readership and the customers of Dalal Street overlap.
Even the media that normally reserves its front pages for politics, for Dr Manmohan Singh and Ms Sonia Gandhi, for Messrs L. K. Advani and Karunanidhi, Lalu Prasad and Mulayam, have now turned Sensex-sensitive. The result: The rise of the index is more attractive as media news today than the news of Shilpa Shetty’s adventures or Sanjay Dutt’s bail or jail news and the like that dominated headlines some time back.
But the shift to the Sensex as the new icon does not make the newspapers any more serious, nor the economic debate any more profound. On the contrary, the stock market index trivialises national economic debate as much as, if not more than, the other icons trivialised most national concerns of that time. Nor is the trust in Sensex as the index of India emerging as a superpower by 2020 any more credible than Shilpa’s supporters’ trust that the public kiss would promote AIDS awareness! Is this verdict too strong?
Blinds the Nation
This takes us to the role of the Sensex and that of the stock market and BSE-listed companies in the national economy. Yes, the Sensex story blinds the nation; distracts it from more serious economic issues. Worse. Nothing could be sillier than measuring the wealth of a nation through an equity market index. The market cap of the listed stocks on the BSE is today estimated by some at Rs 1.58 trillion, or over Rs 63 lakh crore. This is over 150 per cent of the national GDP at current prices!
Does this indicate national prosperity? At any rate, is it sustainable, even for a few months? Some rate hike somewhere, and it is all gone, back to square one. Just a couple of facts will demolish the myth that the Sensex or market-cap captures India’s economic prowess or prosperity.
First, only less than 3 per cent of national household savings get into the stock market.
So, Dalal Street must have far less a percentage of households as clients for the stocks it offers. In contrast, more than half of the households in the US are connected to stock market. Thus, the role of New York stock exchange in the US is incomparably different from that of Dalal Street.
Most Indian savers — and they are among the top savers in the world — do not like the flavour of stocks. They were no fools because they did not oblige their Finance Minister who kept advising them for almost a year to buy stocks and not get bogged down in banks deposits.
The critical fact is that Indians seek ‘safety-first’ investment avenues. They have to protect their savings as they have to take care of their social security themselves. They cannot leave that job to Dr Manmohan Singh, nor can Dr Singh assume that responsibility. They have to provide for their old age, for their parents, for their ill health, for their children and, sometimes, even for near and dear relatives.
The US Picture
See the contrast. The US government relieves its citizens from such excruciating obligations. It has nationalised family functions into public works and thus encouraged the savers to take risks. So, they go to the New York Stock Exchange. If the Indian government too assures Indians that it will take care of their social security, as the US government does, then more Indians will perhaps indulge in the ‘intelligent gambling’ that happens on Dalal Street.
Second, it is not just that less than a 10th of the Indian families access the stock market as compared to the percentage in the US that is hooked to stocks. The role of the Sensex and the BSE-500 companies in India’s macro-economics is minimal, if not relatively negligent. The Sensex companies contribute to less than 1 per cent of the nation’s GDP and the share of the entire BSE/NSE listed companies is perhaps less than 4 per cent. Actually, the entire corporate sector, listed on the bourses and unlisted, accounts for just 14 per cent of GDP, or thereabouts.
Buoyed by foreign money
The Indian savings-to-GDP ratio has topped 32 per cent last year and is expected to go up, year on year. But with these saving largely reserved for safe investments, the risky stock market is open to domination by foreign money. So it is not Indian money that drives or sustains the BSE and the NSE. The Indian stock market is more identified with the Indian geography than with Indian savings or Indian money. When foreign money rushes in, the Sensex goes up and national wealth surges. And, when it leaves, the story is the other way round. Thus, the turbo charge for the Sensex surge today comes from nomadic global money in search of investment arbitrage all over the world.
As India is perceived as charging forward, the global surplus capital is rushing to India. Look at the anatomy of this nomadic money, part of which has no address. The investment from foreign institutional investors in the BSE stocks is put at $193 billion in June 2007. Out of this, the investment through the faceless offshore money, through the much discussed P-Notes (Participatory Notes), is about $70 billion.
The Citi group has estimated the foreign ownership of the top 500 BSE stocks at 22 per cent, up from 12 per cent six years ago. The other owners of the BSE stocks are: promoters and government 54 per cent, domestic mutual funds and insurance companies 10 per cent, and the public 10 per cent. These top 500 BSE companies account for 90 per cent of the entire Indian bourses.
If the market cap of the Indian stock market is $1.53 trillion, the top 500 of BSE-listed corporates account for over $1.35 trillion. Does that mean that the repatriable foreign ownership of the top BSE 500 is $297 billion? The cash in dollars that came in to get the right to this kind of return was perhaps less than a third of this amount. This single item can dynamite not only the stock market, but the economy itself.
Bubble in making?
In this hype, few would dare suggest that the present Sensex surge is a bubble in the offing. Yet, some have openly questioned the surge as a rally for good. One has even editorially warned of a bubble in the making. Such saner voices are the only hope against the mass Sensex hysteria.
The Finance Minister is obviously on Cloud Nine. The Sensex seems to have mesmerised even the trained economist in the Prime Minister. Persuaded by the index reaching 20K, even he has said: “Everything seems to be positive.”
It needs no seer to say that the Sensex surge is globally driven. No one can say how long it will last and how soon it will end. It is de-linked from national savings and investment models. It has all the characteristics of a bubble and a global one. It can be pricked at any time by a small turn in global financial flows, such as a rate hike by the US Fed.
The sooner the Indian economic debate moves away from the anchor of the Sensitive Index and the benchmark of the BSE-500, the better it is for the nation. It is sedating the nation into complacency. This is a Small India which is delegitimising the Greater India. India Inc is less than a sixth of the Indian economy. And India Inc listed on BSE is less than 4 per cent of India as an economy. Of which the Sensex accounts for just 1 per cent of India’s GDP. Sensex is just the tail and should be kept within its limits as the tail. It can wag. But it should not wag the dog. But that is precisely what is happening today, thanks to some of the best minds in the country and the media equating the rise of the Sensex with India’s ascent.

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