Like Dibakar Banerjee’s three stories in reel life, investors’ relationship with the stock market in real life can often follow the same progression. First, there’s fancy, then exuberance, and last some correction. After a roller-coaster two years, we wonder which of these three points global equities are at now.
And Indian stocks aren’t insulated from this. A good chunk of the confidence that saw the Sensex hit a two-year high on Monday owes itself to domestic factors. But a lot of it also rides on global trends: The US Dow Jones Industrial Average also happened to be at its 18-month high last week.
Global stocks are soaring because investors expect a recovery in the broad economy, or perhaps also because Greece has been saved. But analysts are already starting to question valuations, while we may soon start to discover that Greece was hardly the only sovereign risk.
That’s why it’s interesting to see what bond markets are up to. Indian debt holders have been mostly jittery since the Budget. And in the US last week, three different treasury auctions found weak demand, pushing up interest rates.