ON A WEAK BASE

There is an old saying that when a pigeon sees a cat, it closes its eyes, and assumes that it is safe. Indian equity markets are being just that pigeon, ignoring risks and overlooking facts. Despite reality staring in the face, investors refuse to pay heed to econom ic and financial risks due to the disruption from the second wave of coronavirus. Defying the rising death count, case load and slow pace of vaccination, the benchmark BSE Sensex reclaimed mount 50K even as daily official deaths hit an all-time high of 4,329 on May 18 and state after state announced lockdowns to slow the spread of the virus.

With this, Sensex is up 5.1 per cent since the beginning of the calendar year, trading at a price to earnings (P/E) multiple of 32 times, becoming one of the most expensive equity indices in the world. Sensex is nearly 25 per cent higher than the 25.5 times that Dow Jones Industrial Average,