However, I think there are some strong reasons why the market is still bullish on the equities despite weak macros. Here are some possible reasons that are holding the indices higher.

· There is a steady pipeline of liquidity that is flowing into the market and this liquidity is coming from India and abroad. FPIs poured Rs.54,000 crore into Indian stocks in 2020.

· A lot of the buying is coming from pension funds and FIIs have rules around market-cap thresholds. This drives up prices of the broad market index stocks. Similarly, the domestic institutional pipeline that brings retail money to the stock market is also getting thicker. SIPs are pouring over Rs.8,300 crore a month into the stock market.

· In addition, the National Pension System (NPS), unit-linked insurance plans (Ulips) and the Employees’ Provident Fund (EPF) are the other pipelines that get money to the market in a sustained manner every month. They realize that debt is not lucrative and they need to deploy long term money in equities to earn above market returns.

· Investors are also betting that smart fund managers will not pour money into a market poised to fall sharply. More so in the case of foreign investors since they have a choice of asset classes and markets and need not bring their money to India. Mutual funds can also hold on to cash for a while but MF cash levels are at of 3% of the total assets.

· Lastly, market believes that the effect of several reform measures will begin to kick in by the second half of FY21. This includes the impact of NCLT, GST, corporate tax cuts etc. Additionally, the budget is expected to put more money in the hands of the people.

In short the signals are extremely bullish and there is hope that the macros should catch up with the index levels.