New highs for Sensex at 17000 and Nifty at 5000, and the rally continues. How further up do we see from these dizzy heights? The million dollar question is - Are these levels backed by fundamentals?
The markets have witnessed the much talked about decoupling with the US economy. And while the Rupee continues to get stronger the export businesses are taking their share of beatings. It is time to test the India growth story of domestic demand. While there is ample liquidity world over, it will chase the emerging markets that prove to have the most promising sustainable domestic demand.
Where does the domestic demand come from? It comes from private, government consumption and household consumption. Slowdown in exports reduces private investments and puts a downward pressure on the growth. These business have started exploring the domestic markets.
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