Well it’s not just the sensex one can say it’s a sex to the market which is driving it on a record index high every day.

One could say those were the old days when it took years for market to move 500 points in months. But today it’s a dream market moving with a record high and creating a new history.

It’s understood that as Indian business achieving success in their progress, which gives a lift to the market along with the demand and supply of stocks.

But what drives the market at such a high speed is still a big time mystery.
Upward movement of 3k to 4k points in a time span of 6 months is something which even top analysts failed to explain.

Even the Predictions fail in this market. No matter how big the analyst a person in studying this market from decades. Market has also proved them wrong.

Besides buy and sale of stocks which moves the demand and supply in the market has also been amazing.

An automated musical chair of demand and supply of shares of each sector in equal time band has protected the market from falling down.

One can say those were the old days when our markets were running on FII. But now it’s the in-house people who are driving this market with a share of investment less then 2% in shares and stocks.

And this upward growth is attracting more and more investors from local and overseas. It’s a very good sign that we are able to attract world towards us.

Well it would be not wrong if one say IT HAPPENS ONLY IN INDIA.

Is this all for real !!!

The sensex dividend yield has seen a high of around 3%, in bearish markets, but generally it trades around 2.2%.

The capital gains has been made 0% (nil) for a holding period of more than one year and trades thru the stock exchange. For short term it has been made 10%. This has been the status since 2004.

Dividends are tax-free, in the hands of the recipient, as they are declared out of tax-paid profits of the companies. This has been the status for a while

However there are some interesting signals being given by the dividend policies of Mutual Funds. There are many funds which have not declared dividends, especially the equity ones, for more than 12 months, even though their performance has been good(absolute and with respect to their benchmarks and peers). Does this mean the Fund Managers want to retain the cash, atleast for now ?

Yes the dividend yield of the Sensex/ Nifty, would be low, as in the Index you have many IT companies, who are richly valued (25+ PE) and are not great in dividend payouts. In addition the Finance sector, generally a good dividend payout sector, hasnot been in the indices in a big way till recentl

I forgot proper punctuation, All I mean to say that we get 5-6% safe returns through bank FDs or debt instruments. And at this p/e ratio, earnings of a wide market remains 100/16, approximately 6%, Is there any need to take risk for msuch a narrower margin of gain?

“The Reserve Bank of India started raising rates after inflation surged to nearly 9 percent in August 2004. Inflation has since fallen to the 4.5-5.0 percent zone.” http://today.reuters.com/news/NewsArticle.aspx?type=reutersEdge&storyID=uri:2006-02-08T134608Z_01_SP140791_RTRUKOC_0_US-INDIA-SUMMIT-ECONOMY.xml&pageNumber=2&summit=

Tigers in your tank (http://www.theage.com.au/news/money/tigers-in-your-tank/2006/01/30/1138590433721.html) lists various Asian countries and their average P/Es and average dividend yields. The article lists India (presumably the Sensex index) as having an average dividend yield of 1.3%. How does this current dividend yield compare with the Sensex’s historical average? Is the average Sensex dividend yield nearing an all-time low? Near an all-time high?

Also, is there a tax rate difference for dividends and capital gains in India? That is, if capital gains are taxed more favorably than dividends, perhaps companies are retaining more earnings and hoping that such retained earnings are reflected in their stock prices.

16 does seem like irrational exuberance to me, perhaps justified by the growth rate if inflation is in check (is it?).

At a p/e ratio of 16-18 means, returns turn out roughly 5-6% which is very well safe market rate.

Is that wrong or is that wrong… such a relation is ludacris to make.

You won’t get any argument from me as to gold’s use as a bank-deposit alternative in many parts of India. I’ve heard several stories from my parents’ generation that private banks folded, and savings therein vanished. Further, I’m told that bank deposits now need not be insured by the Deposit Insurance & Credit Guarantee Scheme of India. So, the wariness of the common man (Rajan Six-Pack, as opposed to America’s Joe Six-Pack) toward banks is understandable.

You also won’t get any argument from me that gold is a terrible buy-and-hold investment vehicle. Gold’s price chart from 1980 through 1999 could tell you that. How many people can wait out a 19 year bear market?

My only point is that the current investment/savings vehicle of Rajan Six-Pack is not biting him. Rather, it is gaining in value relative to many major currencies. At least with respect to the U.S. dollar, gold has gone up about 33% in one year. Aside from Sensex index and Kospi index investors, who would complain about such an annual return?