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10 reasons for the bull run
Mudar Patherya/ 16 Jun 14 | 12:08 AM

The sentence most commonly spoken on our stock markets is "Kahaan tak jaayega?" So let us understand where this bull market is coming from in the first place.
One, this bull market has been inspired by something that has possibly never transpired in the history of this country - a self-proclaimed pro-business right-leaning government as
opposed to socialist governments that inspired similar bull runs in the past (1985 and 1991) - which inspires a corresponding pricing.
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Two, this rebound comes after an extended downtrend, so it is not only fuelled by a hope of what the new government may achieve but also by a relief that the worst is over. Quite
like the frenzied re-stocking of inventory following years of structural leanness, you don't want to be caught with an empty shelf when the customer arrives.
Three, the bull market is the result of a fortuitous convergence of high global liquidity on the one hand and a relative global under-investment in India.
Four, this bull market is different from the previous two bull markets as this one has commenced before the Budget whereas the earlier ones were triggered by the Budget. It is
building on the expectation of unprecedented structural changes the Budget may propose; when it comes to pricing, "expectations" inevitably prevail over realities.
Five, this bull market has been born in a high-interest environment, any moderation in which (ah, another expectation!) could make fixed income securities less attractive and
inspire a large asset allocation shift into the equity markets.
Six, the calorific value of this bull run is higher because we are not only betting on policy changes and earnings increases, but also an entire market re-rating (doodh ki nadiya
bahengi and that has to be priced into equities, right?).
Seven, it will be far easier to sustain the first leg of this incredible bull market (incredible by the tone of its uni-directional vigour) because the principal actor comes with a multi-year
track record of strategic clarity and demonstrated action as opposed to the other actors of the past who possessed some directional clarity but no retrospective achievement.
Eight, this bull market is gathering momentum not only from the expectations of economic change but also from the principal actor's body language. If he tells his bureaucrats to
work without fear, we buy more stocks; if he walks into a ministry and asks them to clear files with speed, we buy more stocks; if he says he would take non-BJP states with him, we
buy more stocks.
Nine, this bull run is banking on a new form of governance that the government is directing - no touching feet, working 12 hour days, no weekday afternoon golf for bureaucrats,
timed project delivery, speedy file clearance - that could fundamentally change the way India is going to be run forever.
Ten, the ratio of market capitalisation-to-national GDP is about 1.5 in developed markets; in an India demanding to be re-rated, the proportion is only 0.8, with expectations that this
could be progressively corrected. The author is a stock market writer, tracking corporate earnings and investor psychology to gauge where markets are not headed
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