In these circumstances it is not irrational exuberance for stock markets to go over the top. A shift to equity from bank deposits and fixed income securities which absorbed the larger share of savings in the last few years has been written into the script, the markets have read it and reacted quickly. They could not do otherwise. The stock market is taking over where the Finance Minister left off, so to speak, by supplying the missing psychological ingredient in the budget speech. What the latter lacked by way of vision, new horizons or a summons to a rosy future is made up by market-driven euphoria which if sustained could rebuild confidence about the future.

The revival of confidence is essential to get economic actors out of a negative cast of mind broughtabout by a long stretch of slow growth, the squeeze on profits and the pain of downsizing and restructuring businesses. The feel-good factor and positive outcomes in one area tend to spill over into others. Sustained interest in the secondary market could improve prospects for new issues. While cheaper credit behind which there is a strong thrust will improve corporate bottomlines, the revival of markets should lead to new investment plans and risk-taking in sectors where excess capacity does not exist. Flagging consumer demand has been known to revive off the back of a sustained stock market rally. All this is theoretical. Everything depends on the upbeat mood in the market being sustained and reinforced by the enthusiasm of retail investors across the country. Although the present scenario suggests retail investors have nowhere else to go, they will be wary having burned their fingers badly in the past and been disappointed by mutual funds. Too much volatility in the markets and get-rich-quick promises willbe counter-productive. This time around retail investors can be expected to take shrewd decisions based on performance and track record.