By Ruma Dubey

The Nifty is just 20 points short of the big five – 10,000. And the BSE Sensex has been scaling new highs every single day, with some 30 stocks hitting life time highs and over 100 stocks at new 52-week highs today.

The mood is exuberant; no one can really put the finger on one solid reason but all have this faith that the bulls are here to stay for good. Everyone talks about great macro-economic factors – growth expected to boom by 150 bps by 2019, the ushering in of GST, the next to nothing expectation from the ensuing Monsoon session of the Parliament; great monsoon across India has also spread a sense of optimism. Things are good on the oil and dollar front too. The Indian rupee’s 3-month implied volatility has come down to the lowest levels since 2008. Forex reserves are at a record high. Oil prices have never been so good. Global funds are putting money in India - the most in emerging markets. Blackrock has gone on record to say that India is currently its favourite market.

This is also the earnings season and the numbers have been a mixed bag. Cost rationalization and other income have been seen rescuing the bottomlines. The earnings have not exactly polarized the markets yet as expectations are weak to begin with. We can expect this run till 2^nd August – the RBI credit policy and as usual, there is the unusual expectation of rate cuts.

All this is great but why is it that we do not see the same bullishness from the man on the street? Why is it that the multitude of people, working and earning and living, holding their families together, putting food on the table are not really participants of this euphoric run of the market?

For the average man/woman on the street, the savings are much smaller and interest rates are heading southwards – the rates on small savings, FDs, bank deposits are all low. Thus for the average man, the fixed income investments yields are almost zilch.

The realty investments are sucking out more money than actually giving returns – the EMIs and maintenance and overall worth of the asset is stagnating or has come down in value. Or putting it another way – he/she cannot depend on it the way they did 5 years ago.

The average man/woman’s job is also less secure than what it was two years ago. The job is intact, that’s all that matters; companies are cutting costs and thus the salary growth graph is flat. His/her salary is more important for the financial wellbeing than the investment income.

Thus for the average man/woman, to cash-in on the market historic highs, he/she would have to be ready to take on more risks from their portfolio; that is if they have any investment to begin with. To ask that an average person loads up on stocks is for too much. Another big factor – there are very few people around them, like them, who have actually benefitted from a stock market rally. It is the wealthy who rake in more as they have money to spare – irony of life is that only money will attract more money.

There is data to prove that rises in stock market lead to an increase in inequalities and even the middle class is less likely to take higher risks in equity markets. Also remember, there aren’t really too many cheap stocks left – something which an average person can buy and hold without worry.

The real truth is that most of us could not capture too much of the gains and today, we have no option but to just watch the rise into stratosphere. And in a way it is good that the average man/woman do not hold stocks because it is the smaller portfolios which will eventually suffer the bigger losses and pain.