Indian Stock Markets Have Almost Doubled in Last Year

Indian stock markets have been on a ride for quite some time. Last year the sensex was around 6000 or so levels, and this year it has already crossed 13000 levels. And the experts are saying that 14000 levels are not far away. This seems to be completely insane. Nothing so dramatic has happened in last 1 year that justifies this kind of growth. Indian economy is definitely on a rise. But rise is not enough to warranty such kind of valuations. Almost all the major stocks are trading at their all time highs.

Some analysts predict that this is a bubble, and it can burst any time. But the same analysts had been predicting this since last 1 year. This bubble indeed did burst in May/June this year when markets experienced their biggest crash. But markets soon recovered out of that and are now again trading at all time highs. Sensex and Nifty breach new highs everyday, and this does not seems to be stopping.

The valuations of all the stocks have gone haywire. Market value of the actively traded companies has simply doubled in this rally. And some of even the lesser known stocks have gained obscene valuations and P/E ratios. Are all these really justified? What is driving the markets forward?

The answer lies in the simple principle of demand and supply. Nowadays, more and more persons are taking stocks as a serious investment options. Foreign institution investors are being more and more attracted to Indian markets. And there is lots of surplus cash available. So, everyone is vouching for a share of pie in this exciting space, and that's what is keeping the markets going up. This is also proven by the kind of interest that IPO's are getting. Almost all the companies that are launching their IPO's at this time are getting heavily oversubscribed. In fact, one of the recent concluded IPO was oversubscribed over a 100 times!!