In 2017, Sensex scaled off to new heights and closed the year with surge of 28 per cent..

The
30 – share index closed at 34,056.83 on 29th December, 2017. It had gained only by 1.94 % in
the year 2016. Nifty crossed 10,000 for the first time in two decades .For the first time since
2010, major markets have reported higher earnings per share which analysts forecast may
grow 15 per cent this year. The stock market party is not confined to Dalal Street. US,
Germany, Japan and some other developed markets are also witnessing a stunning rally. For
the first time since 2010, major markets worldwide have shown higher earnings per share
which analysts forecast may grow 15 % this year.

These surging figures in India came despite concerns over the increasing Non –
performing assets and increasing write off debts in banks, an investment
downturn and a rise in oil and commodity prices. These figures are in contrast
of what is really happening in corporate sector. According to the report by SBI,
corporate lending has been lowest since 1951 and investments by private
companies have also hit rock bottom of last 25 years.

One of the reasons for this surge is confidence shown by investors in Indian
markets. Even foreign investors are pouring more funds in Indian markets than
ever before. The roll out of policies like GST has helped to increase faith of
investors in Indian economy. As compared to last few years, a large number of
institutions and investors are now investing. After demonetisation, people have
preferred to keep more money in fixed deposits or mutual funds rather than
keeping it in cash. From November 2016 to October 2017, equity funds have
collected inflows of Rs 1.35 lakh crore and balanced funds have received Rs
74,000crore.

The money that goes in mutual funds subsequently flows in larger stocks with higher
weightage in indices which further helps to drive index. HDFC, Reliance, Axis Bank and
Adani Ports are some stocks that have appeared as major gainers on the stock markets in the
recent times. This has driven up the indices higher, even though shareholders were not
expecting companies to post immense profits in their results.

With Government announcing packages for recapitalization plan of public sector banks, the
stocks of these PSB’s have surged significantly last year. State Bank of India (SBI) zoomed
27.58% to emerge as the biggest gainer in the Sensex pack. Similarly with announcement of
huge package of Rs 6.92 trillion for road building programmes by Government, infrastructure
stocks surged up.

The political conditions worldwide have begun to stabilize which has played important role
in Bull Run on Dalal Street and in other markets. With Donald Trump’s major policies and
reforms like H1B visa, tax cuts, healthcare reforms were not able to make through, there is
believe in investors that Trump has begun to understand the situations better. And hence there
might not be any major dramatic reforms in the plate in future. With election of Emmanuel
Macron as president of France, the speculations of France moving out of EU have come to
rest. Angela Merkel was able to retain her position successfully. In short, the Europe looks
more stable than before. All these scenarios are welcomed by market in a positive manner.

In India particularly, the positive and expected assembly elections results have helped
markets to drive up. Any election shock could have led to negative impact on stock market.