Another bull run?

BS OPINION

 After a sharp correction last Monday, the market struggled for a while before roaring back on the back of excellent corporate results, to end the week at its highest level for 26 months.

 That showed the strength of the rally, and its firm grounding in the fundamentals, including the fact that interest rates are low enough to push investors back to the equity option.

 Software major Satyam was able to meet earnings expectations, while the old economy results, for the most part, beat the street. Together with good corporate results, there were encouraging macro-economic numbers as well.

 The monsoons are progressing well, GDP forecasts are being revised upwards, and the infrastructure index for June recorded its highest growth in three months.

 Liquidity remained abundant as foreign institutional investors continued to buy. The market consensus seems to be that while there will certainly be bouts of profit-booking, this is a rally that has reserve strength, and the momentum is still building.

 The primary worry is whether FII inflows will continue, with reports doing the rounds about hedge funds pulling out at every downturn. A look at other markets is instructive.

 The current bull run in world markets is the result of a concerted policy of reflation followed by central banks the world over, and Alan Greenspan