stock market is more a den of gambling than a ral index of natioal economy. The production and consumption data and that too in quantitative as against monetary terms is best indicator of national economy. Most of the manufacturing companies are not listed on the stock exchanges and certainly not included in the Sensex.
While I agree with your observation, the fact is that the Stock Market factors future performance to today's levels. If the indexes are going up today that means they are expecting a bright future in economy in near to medium future. To that extent it is a powerful barometer. Yes speculators with insider trading tips, manipulators out to fleece and naive new entrants waiting to be exploited are present. But they are not significant in the overall impact of the market as a indicator of health of country's economy.