i am no economic wizard but common sense teels me ;
1. india has growing consumer market and business activity in india is bound to be profitable as there is ever growing demand for goods and services. comparatively in developed countries, demand has more or less stabilized.
2. indian government and political system renders confidence in FFIs as there is no immediate threat to their investments.
3. government policies are conducive for foreign participation in business through open door policy.
4. convertability of rupee has facilitated transactions and invetments. tax policies are favourable to FFIs.
5. when you take market as a whole, there is not much movement in productivity - at least not comparable to share prices. dividends are not in proportion to share values. it is surplus funds chasing limited scripts. simple formula of demand v/s supply is ruling capital market.
6. there is surely a bubble. it is not because of scam like in Harshad time but excessive investment by FFIs. if and when they decideto pull out due to greener pasture elsewhere, market will take a tuble.
7. under current scenerio, the bullish run is most likely to continue till 9000 mark.
