Sensex on steroids

The past year had the Indian bulls roaring. People who were patient enough to keep their shares intact for last few years reaped the benefits.The BSE Sensex looked to have taken steroids and kept soaring every fortnight. Though, I don't follow Stock market closely but this news kept catching my eyes. 20K is a huge number for an index which had barely touched the 5K mark five years back. Theoretically, Sensex is the barometer of economy but I am still not convinced that this is real and reflects the state of Indian economy. To me it's the inception of yet another bubble.

There are many reasons for me to get skeptical.The definiton of Sensex is basically causing me the trouble.As per very simplistic definition , Sensex is an index based on 1978-79 price levels when that index was set to be 100. The rise and fall of this index defines the state of Indian economy. If this number becomes 200, it simply implies that the size of economy has doubled.In 1990 , it touched 1K mark ....Agreed it was due to better monsoon harvests to the predominantly agricultural Indian economy. Around, 1995 , it touched 4K mark.....Agreed ...it was due to market friendly policies of Manmohan Singh and Congress Govt....but the recent surges are frenetic.A jump of 1000 points in a day, a drop of 600 points a day....I can't comprehend these. It's not possible that the Indian economy is swinging in this way.
This has to be artificial. A lot many people say that this is due to increased FDIs FIIs in India but let me warn you : FII money is "hot money" in sense that it can be pulled out any minute that might lead to collapse of the Sensex.It's the job of FIIs to invest in stock market of countries and sell their shares when the Sensex soars.A lot many people are speculating when the Stock market is going to collapse . I have been reading the articles of several analysts on Rediff regarding it. People are putting their numbers in this great rush.Milind Karandikar, a neoWave analyst and one of the most famous analysts of this time, has set up a number around 27K from his theories. He can be correct but for me only GOD knows when this is going to happen.

Another aspect that makes me suspicious is the poor Human Development Index of India. India still ranks close to 120 out of 170 odd countries surveyed. If the Indian economy is growing at such a fast pace why aren't the Indian living conditions like life expectancy,average income, literacy improving ? Why is India standing close to its South Asian neighbours whose political and economic conditions are in tatters?I don't find an convincing answer to these questions and this makes me even more suspicious.

One of more terryfying consequences of the growing Sensex is the strengthening rupee.It looks proud when the rupee touches the 38-39 mark against the almighty dollar but let us don't forget that in current scenario a significant proportion of employment is provided by US based companies which are not here because of Indian brain but because India can prove to be a low cost center.Now, as the costs are rising , it's quite possible that they can revert back. Our infrastructure is still not powerful enough to support such a huge population.Who knows what's in store for our country?

Is it the Edwardian summer of Indian economy, where everything is looking fine but actually it is not !!!!!!! May be , I don't know that for sure but for the day let's play in our casino and double our money. 20K is my bet...now it's your turn....