SENSEX:HOW FAR IS 20000?

BY: KUMARI SURABHI KRITWIKA BASU SWETA PRADHAN SHWETA KUMARI

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INTRODUCTION
SENSEX, is a market capitalization-weighted stock market index of 30 well-established and financially sound companies listed on Bombay Stock Exchange (BSE).

OBJECTIVES OF SENSEX
To measure market movements Benchmark for funds performance For index based derivatives products

CURRENT SCENARIO SENSEX on 5th April 2013- 18450.23

Congress: Tossed a Coin In The Air

Focus on economy, boost investor sentiment, shore up business confidence and restart capital flows from abroad.

BSE Sensex closed the fortnight ended Sept27 at 18763,the highest in the last 15 months.
NSE Nifty climbed up to 5700 level. Rupee has surged to a six month high of Rs52.84 against dollar.

Economic Reforms
LPG and cylinder prices have been raised by significant amounts. FDI in civil aviation. Government has opened the floodgates for external commercial borrowings. This will help in financing new projects which have slowed down due to RBI Dear Money Policy.

Impact on the economy

The measures so far taken and implemented are marginal, not major. Government should also concentrate on the new entrepreneurs . Administrative ,judicial reforms, selection and promotion procedures.

CURRENT PROBLEMS RESIDING THE ECONOMY

GROWTH HAS BEEN PLUMMETING,INFLATION IS ON THE HIGHER SIDE AND GOVT FINANCES HAS BEEN GOING HAYWIRE. CORRUPTION HAS LED TO LOSS OF EXCHEQUER 2G SPECTRUM SCAMS ,COALGATE SCAMS AND COMMONWEALTH SCAMS TOOK PLACE BUT PRIME MINISTER WAS A DISTANT ONLOOKER.

GLIMPSES OF HOPE
FDI IN RETAIL AND FUEL SUBSIDIES HELP IN REDUCING GOVT DEFICIT. ECONOMICS REFORMS STARTED BY GOVERNMENT HAS MADE INDIAN STOCK VALUATION ATTRACTIVE. DUE TO THE REFORMS THERE HAS BEEN APPRECIATION OF RUPEE BY RS 3,GOLD AND JEWELLERY HAS TENDED TO DECLINE AND INDIAN CRUDE BASKET FELL TO5800 DUE TO DECLINE IN INTERNATIONAL OIL PRICE. DUE TO THE REFORMS BLITZ THE INVESTOR WEALTH HAS SHOT UP BY 5 % AND AVERAGE STOCK DELIVERY VOLUMES HAS ALSO INCREASED BY 5 %. REFORMS HAS INJECTED LIFE INTO THE INITIAL PUBLIC OFFERING (IPO) INCLUDING THE PUBLIC SECTOR COMPANIES.

WHAT OPTIMISTIC ANALYSTS SAY

IF GOVERNMENT PURSUES THE PATH OF ECONOMIC REFORM FOR ANOTHER ONE YEAR THEN THE INDIAN ECONOMY WILL BE BOTTOMING OUT GRADUALLY IN THE SECOND QUARTER OF 2013. CORPORATE SECTOR APPEARING FOR LOANS IS A HEALTHY SIGN. VARIOUS SECTORS HAVE COME IN FOR RENEWED BUYING OF THE SHARES AFTER RISE IN LEADING STOCKS. PURSUING ECONOMIC REFORMS WILL CUT DOWN RED TAPISM, CUT DOWN ON DELAYS IN LAND ACQUISITIONS, REMOVES WATER SHORTAGES AND REDUCE NUMBER OF INSPECTIONS NEEDED AND WILL ALSO BRING DOWN LARGE NUMBER OF APPROVALS REQUIRED FOR INVESTMENTS.

Problems faced by INDIAN ECONOMY

Current account deficit Fiscal deficit High interest rates Inflation Economy badly needs the inflow of foreign funds in the form of portfolio investments , FDI, increased exports etc. SENSEX may touch 20,000 provided the Reform Blitz continues without any hick ups.

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SENSEX for Oct-Dec 2012

MAJOR CHANGES
The government opened up sectors like multibrand retail and aviation for foreign direct investment and also revised the diesel prices in September. Reduction in interest rates (CRR) 30th Oct 2012- 4.25% (reduced by 25 basis points) 9th Feb 2013- 4.00% (reduced by 25 basis points ) Economic reforms

CURRENT SCENARIO SENSEX on 5th April 2013- 18450.23

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