On 6 July, the Bombay Stock Exchange’s Sensex broke past 15000 points, closing firmly above it early this week. This signalled renewed investor confidence in future corporate performance.

But setting a new record hardly means much in itself because the 30-share index was just 280 points shy of this mark on 9 February. It lolled in the 14000-14700 region until early July.

Billionaire investor Rakesh Jhunjhunwala predicted two years ago that the Sensex would touch 25,000 in 2009. However, 10 days ago he sounded wary. “I am circumspect and rather careful about the market for the next six months,” he reportedly told fellow investors in Mumbai. “A year from now, we will once again enter a long-term bull phase.”

While inflation and rising interest rates weighed on domestic consumption for some time, a firm rupee worried exporters, especially technology companies such as Infosys, Wipro and TCS. But investors are now taking it in their stride. “The two ‘I’s (interest rates and inflation) will not surprise the market any more,” says Mumbai-based Sushil Choksey of Rosy Blue Securities. “Only a surprise in the domestic consumption story will put pressure on it (share prices).”

While a stronger rupee pinches exporters, it works well for foreign investors when they convert earnings to dollars. Ample liquidity coupled with strong corporate performance does not give much reason for the stock markets to cool immediately.

Investors flush with cash are minting money elsewhere too. Over the past year, other markets have outshone India’s, despite the collapsing US sub-prime home loan market, which raised fears of a global recession.