Sensex gained 150% in past 18 Months.

Sensex gained 150% in past 18 months

Just 18 months before the Sensex was 8000 and today in October 2010 it is 20,000. So in past just 18 months the Sensex has shoot up by 150%.

Do you really think that the Indian businesses are doing this much of profits? None of the Indian companies profits have swelled by 150% than how can the Sensex can give you 150% returns in just 18 months?

This is because of the FII Inflows in Indian Equity markets. Since past 18 months, lots of foreign money has entered into the Indian equity market and that’s why the Sensex is flourishing because of this money.

Now, the question is that, if there is a recession in USA and economic slow down in the developed world than from where did this money come from?

Well, basically it is a newly printed money out of thin air that has been generated by US Government in past 18 months by quantitative easings by the US Government.

This newly printed money has find its way to the emerging markets like India and China and that’s why the Sensex has ballooned like anything.

These are not the actual valuation appreciation of the Indian companies. But it is the newly printed money by the developed world that has entered the Indian stock market which is shooting up the Sensex crazy high levels.

Thus, the Sensex will flourish like this until the US Government won’t stop printing new money in the economy.