Markets have been on the surge since August 28, 2013, even under the earlier UPA government's rule. Expectations of a stable government led by Bharatiya Janata Party (BJP) with minimum coalition partners, if not absolute majority, soared with the elections approaching. Since the formation of the government that made a come back with a sweeping majority, the markets have not looked back.
From large cap stocks to penny stocks, all have been on the roll.
"Large cap stocks had little room for appreciation and the rally was more prominent in small and mid cap stocks," said G Chokalingam, of Equinomics Research and Advisory Services.
The rally has been broad-based. In the 100-day rule under the Prime Minister Narendra Modi, sectors that were buoyant were pharmaceuticals, logistics, manufacturing, engineering & infrastructure and MNC stocks.
Most companies from these sectors, especially infrastructure and manufacturing were stuck amid under-utilised capacities due to lack of policy direction and cost escalation.
Since August 28, 2013, the indices have gained 44% to date. Scaling new peaks have become the norm. Nifty on Monday ended at a new high of 8027.70.
In the 100-day rule of the new government under the Prime Minister Narendra Modi, sentiments at the ground level certainly improved dramatically.
Four major reasons for the current confidence that get reflected in the stock trends: one the BJP has absolute government; second, policy paralysis that stunted growth under the previous regime largely due its coalition status, would no longer be the case now; third, inflation has certainly began showing signs of peaking out and fourth the drop in growth has bottomed out.
Backed by the above facts, foreign investors have been extremely bullish on India and have reposed faith in the India growth story. As has always been the case, markets discount future earnings. In the last three months, foreign institutional investors have pumped in over Rs 87,000 crore into the markets of which investments in equities alone stood at Rs 31,841 crore.
Modi's visit to Japan has won India $30 billion of investment commitment over the next five years to India's growth expansion. This is another feather in the cap and only the beginning of the kind of investments India would see in the coming five years. The Supreme Court's order last week terming all coal blocks allocated between 1993 and 2010 illegal was also welcomed by the government which said they now need to be auctioned for price discovery.
"The matter was simply going out of hand and with the apex court stepping in and the government agreeing to auction these coal mines show the intent of clearing the system.
The government has also urged 60-odd blocks already producing coal to be excluded from the list to which the Supreme Court has asked for details," said Arun Kejriwal of Kejriwal Research.
"The 20-year mess is likely to see the light of the day and we will once again be on track," he added.
There is undoubtedly a change in sentiment as bankers say that consumer spending is gaining momentum, though a bit early to confirm the sustainability fact.
Pricing of products haven't come down but sentiments have changed. "The most critical improvement is the big change in sentiment, which on the one hand is getting reflected on the Sensex and on the other on the higher sales of cars and two-wheelers," said K Harihar, treasury head at FirstRand Bank.
"The GDP will show a sharp trajectory upwards, but at least one needs to wait for another 24 months or so to see a growth rate of 8-9%," he added.