India: Sustainable? Or False Hope?

FN: The India 30 Sensex (BSE) has rallied from a low of 7697 to 15168, or 97%. Bringing prices back to the pre-blow off top highs of 2007. In September of 2007 the index went parabolic even as the S&P 500 peaked around 1575. Hot money flowed out of North America and Europe an into emerging markets, pushing them to new highs on the ridiculous "Decoupling Theory".

Are things really good enough right now to warrant the very high prices of 2007? Global trade is still collapsing... just look at Japan and Germany.

Japan Economy Shrank 14.2% Last Quarter on Exports (Update2): "Japan’s economy shrank less than the government initially estimated as business investment and inventories fell at a slower pace.

Gross domestic product shrank at a record 14.2 percent annual pace in the three months ended March 31, less than the 15.2 percent reported last month, the Cabinet Office said today in Tokyo. The median forecast of 23 economists surveyed by Bloomberg News was for a 15 percent contraction."

FN: Despite a new, market friendly government the euphoria in Indian equities seems quite a bit overdone.