In the last couple of months or so, a few key developments have happened in India’s stock markets. First, the benchmark BSE Sensex has been on a gaining spree and has increased from 27,600 in January to within sniffing distance of a landmark 30,000 in April. Second, foreign institutional investors have invested more than Rs 30,000 crore in domestic equities. And, most importantly, the rallies at the markets have an important element that was missing from the markets in the past—domestic retail and mutual fund investors.
The prolonged, post-demonetisation bull run in the markets have not only market forces to thank, but also key factors in the economy and the political scene. Market sentiments are riding a remarkable crest of confidence in the government’s ability to ensure a stable political and economic situation for the foreseeable future.