Stock mkt may gallop to $5 tn in 2 months; economy in a slower 4 yrs

livemint.com:

BSE data. That leaves a gap of just $250 billion to reach the $5 trillion mark. Going by the pace of the rally in the PSUs and the benchmark Sensex, this figure could be achieved in the next two months, said analysts.

Since the latest leg of the rally from 26 October, the market cap of over 5,300 companies listed on the stock exchange has grown from $3.73 trillion to $4.75 trillion as on date, BSE data shows. That’s a little over a trillion dollars ($1.02 trillion) in just over two and a half months. The biggest contributor to the all-India market cap increase is the 56-share BSE PSU index, accounting for $290 billion of the $1 trillion rise since 26 October to date.

The second-biggest contributor is the 30-share Sensex at $259 billion, followed by BSE Midcap 150 at $214 billion and BSE Smallcap 250 at $92 billion. These four contributed 85% to the surge in market cap. “Another 5% rally in the Sensex and continuation of that in PSU banks, defence, railway and power stocks could drive the m-cap to the $5-trillion mark within two months, if we factor in chances of a pullback, which is possible with the markets near record highs," said Rajesh Palviya, senior VP at Axis Securities.

The latest leg of the rally has been driven by PSUs with the BSE PSU index jumping a whopping 59% from 11,876.85 on 26 October to 18,842.09 on 16 February. The BSE Sensex has rallied a comparatively modest 14.69% to 72,426.64 over the same period. The Midcap index has returned 27.3% to 13,593.2 and the Smallcap index by 25.7% to 6,068.4 over the same period.