Non-stop Indian market is top gainer in Asia

Shanghai Composite of China — whose economy was growing at 9 per cent — with a growth of 1.74 per cent, is nowhere near India in market growth. This could be because China is yet to encourage its tightly regulated stock markets.

Karachi Stock Exchange, which faced trouble earlier this year due to scrapping of badla, has recovered fast to give India a run for its money. South Korea, which comes third, has showed a rise of 27.68 per cent since the beginning of 2005. The Sensex is ahead of the leading indices of countries like Indonesia, Taiwan, Japan, Malaysia and the Philippines.

According to experts, India could well be the top gainer. ‘‘No other market has gained like Indian markets in 2005…. be it the UK or the US markets,’’ said a stock dealer.

Analysts are also worried over the rise without a correction. ‘‘Indian market is running ahead of the fundamentals. The market is overtly bullish about fiscal 2006. There are high expectations in the market. If these are not met, the market will witness a major correction,’’ said Sandeep Shenoy, Head of Research, Pioneer Investsmart.

Most experts think the Sensex rise is not a feather in the market’s cap. ‘‘It’s true that FIIs are pouring money. Even HNIs are investing in a big way. The steep rise without any correction is suspicious. The market should have gone up with a correction. This is a one-way rise,’’ said an analyst with a foreign broking firm. ‘‘It’s a vicious circle. As the market is bullish… more money is coming in. There is excess liquidity,’’ said Ambareesh Baliga, vice-president of Karvy Stockbroking.

The Sensex PE (price-earnings ratio) is also rising. It has gone up from around 14 last year to 17.5 by Monday. Though the FM says this is a comfortable level, the PE level will turn dangerous if corporates fail to post good profit growth figures in the next earnings session.