FY21 has been a paradoxical year for the equity markets. While the pandemic played havoc with economic activity across the world, stock markets showed a diagonally opposite behaviour. Amid the new highs scaled by the markets during the year, we are yet to see a sizeable and sustainable pickup in economic activity. Green shoots are emerging and over the past two quarters growth is apparently coming back on a low-base effect and pent-up demand. The domestic equity market continues to be riding higher with intermittent bouts of decline. The Sensex has gone up from 37,000 in late September 2020 to trade around 50,000 level currently. The scorching pace at which the market has scaled all-time high levels has been perplexing to many retail investors. India’s market-cap-to-GDP ratio was now at a 20-year high of 104 as on March 18, 2021. The ratio was at 56 in March 2020, which was the sharpest decline in it. Even on price to earnings (PE) ratio, the current valuations are way above historical averages.