Brainwave

SENSEX 20000+ - THE TRUTH BEHIND



Indeed I am not a businessman or a business analyst but one thing is for sure, that I can foresee certain aspects of latest Bull Run in the market as far as the SENSEX is concerned.

So, few of you, like a number of my other friends believe in figures and undoubtedly, it is indeed very difficult to contradict their views. Without a shadow of doubt, the SENSEX surpassing 20000 points is a great achievement for the Indian market but there is much more behind this latest Bull Run.

A few of you might be perceiving the current performance of SENSEX as “India Shining” type of a thing that was the election campaign “MANTRA” of NDA but I need not mention the end results in the elections.

In fact the truth behind the latest Bull Run in SENSEX is far more shocking. Those who boast of this fact must also know that there are only a handful of companies whose shares are gaining significantly. It’s just eight to ten companies that are contributing to the rise in SENSEX, contributing around 85% - 90% of the increase. In fact there are many companies which are on the losing side with their share prices falling regularly. But due to the tremendous increase in share prices of few major players like Infosys, Larsen & Turbo, Reliance Industries and many such companies the above-mentioned fact is difficult to realize.

The latest Bull Run in SENSESX has made Mukesh Ambani richest person in the world by overtaking Bill Gates, which must be a surprise for him also.

But the question is, for how long?

Now there are few major questions that needed to be answered in view of the latest Bull Run: -

·        Is our economy really booming as it appears?

·        What about people of the country?

·        What about small companies?

·        What will happen next to the Indian market?

·        Will there be more examples like Mukesh Ambani and will they be able to sustain their elite positions?

Answers to the above questions are indeed very difficult to be given, even by the best minds in the business field. Though we are moving at a good rate, the rise in SENSEX alone cannot be a basis of judging the economy of any nation. Moreover, the condition of the people of India especially the rural one’s will substantiate this point. Recently a report by The United Nations has placed India at 98th position, even below Ethiopia in the Hunger Index!!!

Although the Indian market is in an upwards phase as of now(and overvalued), but with the passage of time there will be a tremendous downfall in the market (Nose Dip) as most of the business analysts believe

As far as Mr. Mukesh Ambani is concerned it is very hard to believe that he will be able to sustain this elite position for long as it totally depends on the status of the market, which is sure to see a steep downfall. And since his position is totally dependent on the performance of the Indian market there is a great chance of him losing that position.

So, no more cheers for him until and unless you are one of his BIG fans!!!!

In the end I would like to mention a famous saying that:

 

"ALL THAT GLITTERS IS NOT GOLD"

&

 

"SLOW AND STEADY WINS THE RACE"

 

(The article was written in October, 2007, and in January, 2008, the SENSEX witnessed a steep decline along with the biggest intra-day fall ever in its history of over 49 years)

-By

Mohd. Zia Ullah

IIITA

MBA(IT) Semester 2