I don't have a PhD like Arvind Subramanian. I cannot talk about Intellectual trash like him. I am not a professional pessimist like him. I don't watch the rearview mirror to tell the obvious. But I can tell you why the market is moving up. Please read this thread completely.
A financial market is a discounting engine. It does not look backward. It looks ahead. There is only question it debates all the time: What will be the impact of steps Govt is taking today six months, nine months, twelve months from now
Yes the economy looks bad right now. But if you look at the reforms since August - Corp tax cut, FPI tax withdrawal, Bankruptcy laws execution - the market is getting the confidence that the Govt is responding to the situation. The market likes the work being put in right now
One major factor that acted as a headwind for the Indian economy: Slowdown in Global growth due to trade war uncertainty, and inverted yield curve noise. All that has gone. So, FIIs have started buying Emerging market assets EEM, which is on verge of a breakout and can rally big
Net net What is market trying to tell us: Things are bad but the medicine is working. Global conditions are getting better and hence Indian economy can revert back to its trending growth of 7% faster than what pessimists are imagining
Is it certain that will happen? Nope. The market is making an assumption that it will happen just like professional pessimists are telling it will not happen. Now you have to decide: You trust pessimists or the market. Well, any day I will trust the market
