On Monday, the Indian stock market sent a strong message of the economic vibrancy in the country to visiting U.S. Treasury Secretary Henry Paulson by driving the BSE Sensex to a record high of 20,000 points.

The BSE Sensex is an index of 30 large and actively traded stocks on the Bombay Stock Exchange.

After hitting a high of 20,024.87 in intra-day trading, the market ended up 3.82%, or 734.5 points, to close at 19,977.97. It was the third-biggest single day gain for the Sensex.

Traders were optimistic about rate cuts at the U.S. Fed meeting on Wednesday. Domestic institutional investors were also active in the market.

The Sensex has gained 2,417.69 points or 13.77% in six days.  

Over the last 10 months, the rise in the Sensex – which ended 2006 at 13,786.91 – has been amazing.

The Indian economy and its stock market has been growing gangbusters just as the U.S. economy is in a meltdown because of the self-inflicted sub-prime mortgage disaster, high oil prices, Iraq catastrophe and effete political leadership. 

Religare Securities president for equities Amitabh Chakraborty told Reuters:

India is no longer an option but a compulsion for an overseas investor, and money will flow like water as we are a very lucrative market. 

Coincidentally, U.S. Treasury Secretary Henry Paulson was in Bombay, India’s commercial capital, on Monday to address the U.S.-India CEO Forum Infrastructure Conference.