Search Now

Recommendations

Tuesday, January 08, 2008

The elephant and the bull market


At the epicenter of India's booming stock market, on Mumbai's Dalal Street, there's hardly any sign of frenzy. A few dozen people stand outside, laconically watching the electronic ticker. Several murmur into phones behind cupped hands, as vegetarian-snack vendors sell samosas and sub-brokers hand out company prospectuses.

Inside, the Bombay Stock Exchange's once-rambunctious trading floor has long since closed. Now brokers place orders quietly and electronically from elsewhere.

But the calm belies what's really going on - an unprecedented run-up in stock prices fed by foreign-investor enthusiasm about India's economic growth, averaging 9% over the past three years. In the past three months more than $7.9 billion in foreign equity capital has flooded in, pushing the market up such a steep curve that the key Sensex index gained some 3,000 points, or 17.5%, in just 33 days this fall.

Read more