By Ruma Dubey

Today, the market hit new highs on hopes – they are calling it the ‘Modi Wave’ as for now, the market seems to have concluded that Modi is set to win and become the PM. But in a country as diverse as India, with 60% of the population living in rural India, where caste and ‘benefits’ sway votes banks, isn’t this too early and immature to celebrate?

The market is usually accounted for being very sane and practical, with an ear to the ground. It is stated to be the barometer of the economy. If that is so, somehow this logic of ‘Modi Wave’ makes no sense; it is in complete contrast to the way in which market moves. And that brings us to the most pertinent question – is the market really swaying to the Modi wave or is there some major operators jugaad going on?

How come no one is really celebrating these new highs? Or why is everyone eyeing this rise with a lot of skepticism, knowing that it’s just a ‘rally’ and not a sustained bull run? Well, to begin with look around you; has anything changed perceptibly? Unemployment remains high, you go out with Rs.1000 in your pocket to buy basic needs of life and you come back with a small bag and loose change; petrol and diesel prices are only going further up, interest rates are high. The fall in Current Account Deficit, which is what FIIs wanted to see has happened but how does that affect our day-to-day life? Yes, there is a sense of hope that elections will turn the tide, economic growth will get impetus which is why capital goods and infra stocks are on the rise. As one can see, the rise we see of today is built on hopes that too on flimsy politics.

FIIs are running this rally. They feel that the worst is over for India. Is that really so? Nothing has changed between last month and this month – how come this sudden shift in sentiment? Can one blindly trust the mutual funds and FIIs? These are the same people who raised a red flag on Maruti’s Gujarat plant and pushed down the stock price. That though has not deterred FIIs from stocking up on Maruti as local mutual funds voiced opposition.

Also when we say Sensex has hit a new high, find out if the optimism has percolated down to the small and mid cap stocks. That does not seem to be the case here as all the action is restricted to large cap stocks only which is the preference of the FIIs. We as retail investors do not exist at all and thus do not have the strength to move the markets. FIIs continue to lap up the same shares as they feel small and mid cap stocks have major corporate governance and disclosure issues.

Retail investors trust has been eroded and dented. They have literally disappeared and will not come back in a hurry. The IPO markets are in a coma – when primary market is dead, only large cap stocks are hitting new highs, can we really celebrate this new found love of the FIIs for India? Their sudden re-discovery of India and her fundamentals is irksome. What we are seeing today is growth in selective stocks only – a non inclusive growth creating major inequalities. The current upward rally can be due to expected improvement in growth but somehow, yeh baat hajam nahi hue; it seems more manipulated than a surge led by improvement in key economic indicators.

The bottomline – till 16th May, this is how it will be – some days wildly up and the other day, sharply down. Don’t dance to the tunes of the FIIs and Sensex. Better to stock up on quality stocks like always, with only the long term perspective in mind.