New Delhi: The continuing bull run in the Indian stock markets is an indication that traders have faith in the stability of the government, market observers say.
With the Lok Sabha elections scheduled for 2024, the general sentiment is that India is likely to be among the few emerging markets globally, which may continue to hit an all-time high in the long run in terms of economic growth.
Market observers are of the view that there is a lot of optimism among traders that the stability provided by the Central government in terms of policies, which is one of the main reasons behind the rising domestic stock markets.
A. Chowdhury, a stock broker and long-time observer of Indian markets as well as government policies, said that predictability and stability are the two factors which have been attracting foreign institutional investors (FIIs) and foreign portfolio investors (FPIs).
These two factors, he said, have been sustaining the bull run in the Indian indices and the momentum is likely to continue well into the next year.
He further explained that among traders, there is a strong probability that the BJP-led NDA government is likely to return for a third term, and this sense of predictability coupled with the stability of the government, has propelled the continued bull run in Indian stock markets.
Moreover, economists too have been saying that policy reforms should continue and if inflation continues with its downward trend, then, supported by good monsoon, the Indian economy could be an example of a success story among emerging economies.
However, weather, especially the monsoon, needs to be good, in order to maintain economic growth, which in turn, will maintain its leverage on Indian markets, Chowdhury said.
While it has been raining heavily in several parts of the country, rainfall has been deficient in the crucial states of Uttar Pradesh, Bihar, Kerala and Tamil Nadu, which he said, could be a drag on economic growth.
However, he reiterated that the silver lining is the positive sentiments of stability and predictability, which have been driving the indices.
Also with the month of August still to arrive, experts are optimistic that monsoon may reach rain deficient states, which is expected to act as a boost for the overall economy.
Therefore, the overall positive sentiments coupled with lowering inflation, are expected to keep the markets’ momentum on the higher side, they added.
–IANS