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It
would be hazardous to conclude on the basis of the title
of this article alone, that the entire article is predicated
on the assumption that investment in Indian equities is
not fundamentally justifiable. However, it really cannot
be denied that, whether you like it or not, the consistent
pumping of domestic and more importantly global funds into
these stocks has today resulted in a situation where the
Indian markets have been methodically made to reflect on
global realities more than ever before.
Further
evidence of this phenomenon can be found in the fact that
the number of shares being traded of Sensex stocks has steadily
increased. Hence, while prices have still remained below
all-time high levels or thereabouts, market capitalization
of the 30-share index has increased owing to an increase
in the number of shares issued.
What
is noteworthy, however, is that the increase in float is
not a result of fresh capital raising initiatives or fund
infusions into these companies but because of events such
as bonus issues and stock-splits. What this means is that
purely from a valuation perspective, the explanation could
lie in one of the following two theories.
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