Random thoughts on market high

According to conventional wisdom, growth in earnings drives stocks higher. But it is not so simple

Last week, the Indian markets hit an all-time high. The Nifty crossed 19,200 and fell back, while the Sensex crossed 64,700. There is strong bullishness all around, with some suggesting that the momentum is so strong that the Nifty will quickly cross 20,000 and go higher. Suitable “narratives” are always available to support such market forecasts when stocks break out or break down. This time “experts” point to favourable winds for stocks, such as lower inflation, pause in interest rate hikes, normalisation in the global economy, which grew massively in 2021 but suffered a severe economic shock with Russia’s invasion