There are times when markets seem fully on their own trip and in no mood to look at what is happening today, as they anticipate a golden tomorrow. As the market hits new highs every day, up an unbelievable 75% from the March 2020 lows, investors are asking the question—how high will markets go and is this rally sustainable?
Other than global liquidity, some reasons for markets being happy are related to the better-than-expected recovery of the Indian economy. The Reserve Bank of India (RBI) has projected a contraction of 7.5% in financial year 2010-21, better than the minus 9.5% projected earlier. The central bank estimates that the first quarter of the next financial year will see a positive growth of 21.9%. The market is also blending in the argument that this recovery is possibly being built on a different base than earlier.