Sensex has more than doubled in 2 years from 9K to 19K.
Now we have to ask does the SENSEX index can be hold as a parameter to judge Indian economy?
Ideally the Market indexes should reflect the underlying economy. But then we all know the Indian economy has not DOUBLED in 2 years, even with 10% annual growth it can be assumed it only grew by 25% in 2 last years.
So either the SENSEX was grossly under-estimated prior or now it is discounting for coming years of 10% growth.
RE:Does SENSEX really represents Indian Economy
by Hans Solo on Oct 16, 2007 08:50 AM Permalink
Also another important thing to note is that it took almost 5 1/2 years for sensex to move from 6k to 7K.
So maybe the sensex was grossly under-estimated at that time and hence doing a catch up now.
