Sensex crosses 31000: Why no euphoria?

While the Sensex has hit 31000 for the first time ever, a correction could be on course. The cautious approach among market-men and sustained liquidity are two factors giving confidence that the market isn't expected to witness any huge correction from these levels.
 
The big reason for the stock market not being euphoric is because everyone is cautious. When sentiments are cautious, markets don't tank. In fact the probability of scaling higher is more than slipping lower.

Unlike 2007-08, where stock valuations were high, sentiments were bullish and earnings were at their peak, today only valuations are high and stretched. On the other two parameters, sentiments aren't bullish and earnings are poor and probably may be at the bottom.
 
Also, the rally is not across the board. While mid-cap and small-caps are in the euphoric zone, stocks where there is clear earnings visibility have been the darling of the market. Despite huge flows, fund managers aren't getting carried away in picking up stocks.

They are sticking to the large-caps and quality name where there is a clear earnings visibility. Even expensive fund managers are not experimenting with quality and are only sticking to stocks where they have at least 3 years of earnings visibility.
 
Strong domestic inflows are a game changer. While it's still not Retail 3.0, the high net worth individual (HNIs) are back in the market which are continuously infusing capital in the equity market. One of the reasons being that there is no visibility in making great returns in any other asset class.

Fixed deposit return for a year is 7 per cent and below.
 
Mutual funds are for the first time a dominant player. In the last one year money through the systematic investment plan (SIP) has jumped from Rs 1,500 crore to Rs 4,000-4,200 on a monthly basis. FIIs too are coming back stronger. So far in 2017 they have invested close to $8 billion.

Other issues like oil prices, the fiscal deficit, Inflation, rupee, government spend and reforms have also been favourable.