First random thought this morning
This winter has been unusually bright and warm. This has certainly
extended the Christmas festivities for the urban populace in North India. The farmers
are though a worried lot. Wheat farmers in Punjab, UP and MP who have been
braving drought for past two years appear to be throwing in the towel.
Many agricultural tenants have defaulted on their obligations and
many distressed marginal farmers have put their land on the block.
Thought for the day
"Wisdom begins in
wonder."
—Socrates (Greek, 469-399BC)
Word for the day
Unputdownable (adj)
(especially of a book
or periodical) so interesting or suspenseful as to compel reading.
(Source: Dictionary.com)
Malice towards none
If you have to name just one, what in your view would be
the most critical problem afflicting
India presently?
Nifty: Hope prevails
As the benchmark indices tested the lows recorded in September
2015, the broader markets demonstrated remarkable resilience.
The current level of outperformance of mid and small cap is in
fact widest since the current up move started from late August 2013.
Juxtaposed with the rising retail participation, strong response
to new issues, improved market breadth and consistent domestic flows into the
market, it is clear that:
(a) presently the equity is
the most preferred asset class with domestic investors;
(b) despite uncertainty
over economic reforms, and poor corporate performance the domestic investors
have not lost faith in equities and remain mostly hopeful of a imminent
recovery;
(c) given the strong activity
in poor quality stocks, the dominance of greed over fear is evident.
As I have been pointing out in recent months, historically, this
outperformance of low quality and small cap has invariably marked the cyclical
peak for the markets and is usually followed by a sharp correction.
It is though difficult to put a timeline on expected sharp correction in broader market, I will still hazard a guess - between 20th February and 20th May 2016.
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