The Sensex has risen over 25 per cent since Narendra Modi was appointed the BJP's prime ministerial candidate in September. After his overwhelming mandate, the Sensex has crossed the record 25,000 level in anticipation that he could turn around the Indian economy that is suffering from its worst slowdown in decades.
But Prime Minister Narendra Modi should not look regularly look at stock markets while formulating economic policy, global brokerage firm CLSA said.
"Let's appreciate that financial markets always want instant gratification, I don't think Mr Modi will be running his policy agenda by looking at where Nifty and Sensex are on a daily basis. In fact, he shouldn't at all," Rajeev Malik, senior economist, CLSA told NDTV. (Watch: Video)
Though many analysts are optimistic about the prospects of a turnaround in Indian economy they caution that it could take Modi at least two to three years to bring the economy back to an 8 per cent growth rate that is needed to give jobs to millions entering the workforce every year.
"Markets should reflect what the underlying macro situation is going to play out. The macro policy should not beholden to what markets are doing," he added.
Mr Modi's economic agenda will be long term and not everything will get fixed in a period of three months, Mr Malik said.
However, he pointed out that Mr Modi's government has hit the ground running. "Part of the idiosyncratic slowdown to a large extent had to do with policy paralysis and the hands-on, result-oriented approach now will obviously pay dividend," Mr Malik said.
On Wednesday, Mr Modi met 77 top bureaucrats, the first such meeting in eight years, an official statement said.
Commenting on Modi's meeting with bureaucrats, Mr Malik said, "Certainly a positive development, almost unheard of in the Indian context but again bear in mind that this is one the things that was clearly expected of Mr Modi given his own characteristic approach," Mr Malik said.
In the meeting Mr Modi asked bureaucrats to do away with "archaic" rules and procedures which hamper governance by creating "avoidable confusion" and encouraged them to take decisions with a promise of backing them.