Sensex at 21K: 5 reasons why we can't cheer this bull run

Unlike the previous rallies of 2007 and 2009, this time the rise in the market is not supported by a robust economy.

It is probably for the first time that markets have touched a new high and we have not seen celebrations which are generally seen during such occasions. Enthusiasm is completely missing among the retail and institutional participants.

Gloom is written on the faces of most of the old market participants.

Click NEXT to read the five reasons why there were no celebrations this time around...

The general belief for the present rally is that it is a liquidity based one. But so were the previous ones in 2007 and 2009. 

While in the earlier rallies there was some support from the economy, this time around it was completely missing. 

India's GDP in 2007 was growing at a rapid pace of 9.32 per cent while it is currently chugging at less than 5 per cent. In other words it is only the markets that have rallied and not the economy.

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Rising unemployment and inflation has left little money in the hands of the people to invest in the market. Inflation (WPI) in 2007 was 4.8 per cent while it is currently 9.6 per cent. 

For the interim six-year period in between inflation has been higher, thus the compounding effect of inflation has a much higher effect on the meagre savings and flat earnings during the period.  

This means few have taken part in the rally.

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There are few retail clients left in the market. Both demat data and mutual funds folio shows that a sharp reduction in the numbers over the last five years. 

These numbers reflects the sentiment of an ordinary retail participant towards the market.  

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There are few people left to celebrate. A few days before the market closed at a all time high there was news report of nearly 500 brokers closing shop. 

Though volumes are touching new highs, these are concentrated to a few foreign broking houses. Most of the regional and some of the high cost national brokers have closed down.

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Data collated by BS Research Bureau shows that the rally has not been broad based. 

While the broad index is at all time high, mid-cap index is 40 per cent away from its high level while small cap index is 60 per cent away from its all time high levels. 

Retail investors, who generally invest in these shares have not benefited from the rally. 

Another set of data shows that between December 2007 and September 2013, retail and HNI percentage holding in Nifty stocks have reduced along with those held by domestic mutual fund. The only segment of investors who have accumulated shares during this period are the FIIs.