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    • SENSELESS SENSEX
    Following media predictions that a NDA Government led by Sri Narendra Modi is likely to assume power shortly at the centre, the stock markets have been literally on fire so claims pink brigade. If stock markets are to be barometers of the economy, there were earlier bull runs when Harshad Mehta and later on Ketan Parikhs held sway over the brokers and BSE. People made a lot of money on speculative investments. Even an investor of my poor understanding of the dynamics of the stock markets, could make  huge profit when I decided to sell some 3000 shares of City Union Bank Ltd. It is claimed that an investment of Rs.1000 in Infosys made in 1991 when the Company went for IPO is worth millions today. But I fail to understand whose money is it any way? The PE Ratio of some blue chip Software companies are more than 25 to their EPS. in the case of Infosys whose EPS in 2013 is Rs.158, the current market price of Rs.3200 discounts by almost 20 times. This is unheard of in any mature market. in the case of TCS it is about 23 times, and this paper wealth is questionable. The huge piles of cash that these Companies have on their balance sheet is not used for building productive assets. Atleast TCS has some standing in product space, Infosys is purely driven on BPO/bank office and front office work. 

    To claim that markets react positively to a change of government a choice made democractically by the people empowered to do so, it stretching things a bit too far. Again these investments are from Foriegn Institutional investors on bell weather companies who will not hesitate to book profits when our PSU Companies LIC, GIC will be expected to bear the tumultous shocks thereafter to protect the ordinary investor. 

    Direct taxes which includeIncome tax and corporate taxes account for a major source of reveneue for the Government while one MIT trained professor amongst BJP ranks, (he was also a former Commerce Minister) Dr,Subramanian  ) claims that IT will be abolished and retained only for the super rich. 

    Sensex consists of actively traded stocks in the market numbering about 50 and that includes companies from various sectors.The stock market indices are only a reflection of demand supply gap amongst avaricious brokers and does not truly reflect the state of the economy as such
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