"History does nothing;
it does not possess immense riches, it does not fight battles. It is men, real,
living, who do all this."
—Karl Marx (German,
1818-1883)
Word for the day
Sylvan (adj)
Of, relating to, or
inhabiting the woods.
Malice towards none
Want freedom from traffic
jams - call the FM to your area and keep him stuck in jam for two hours!
First random thought this morning
Since Kanahaiya Kumar and Richa Singh have taken over the
headlines, the common man is being seriously deprived of the "real" news,
e.g., Why did Anushka and Virat break up? Why did Ranbir and Katrina break up?
Why Aamir Khan has been chosen as brand ambassador for irrigation department of
Maharashtra? Why Salman and Shahrukh have crossed swords again?
By the way, do you know the viewership statistics of the latest
videos of RaGa, NaMo and KK's on Youtube?
Tippy Tippy Tap - What color you want?
Traditionally, the divergence of global markets from the real
economic conditions is usually followed by a sharp correction that leads to
convergence of realty with hopes.
I have not been able to derive a pattern in such corrections. But
sentimentally I feel that the correction are sharper and more painful when hope
runs much ahead of ground realty. Many more people lose money in this
correction as compared to the people who earn supernormal profits during the
course of divergence.
The sharp fall in stock prices during past six months was clearly
a case of reality whipping the hopes. The correction has been sharp and
painful. It will quite some time before investors' sentiments recuperate.
In the reverse case, i.e., when real economy does much better than
the markets, the corrections are protracted and less euphoric. Few people
participate in the up move. A majority of investors join the party late,
usually when all the fruits have been plucked by smart investors. What is left
is either few scarred fruits at the top which are risky to pluck or the
overripe rotting stuff scarred all around.
The rally in Indian stocks from 2003 to 2006 was a classic example
of this instance.
The key point to ponder this morning is what pattern market is
forming today!
(a) Is market sensing an
imminent economic recovery, which many investors are unable to anticipate; and
hence the shallow rally from the recent lows may gradually strengthen further
in next 6months, before investors' sentiment improve and they jump in to
participate? and/or
(b) Have global investors
started to see India separately from the entire emerging world, in view of its
stronger macro fundamentals, and hence Indian assets (INR, Equities and Bonds)
are witnessing a stronger interest from global buyers? Or
(c) The global economy is
expected to remain in slow lane for at least another 12months. China has
already started working with lower (6-6.5%) growth estimates. Japan and Europe
have remained on the brink, never really looking like recovering from recession
post 2008-09 global crisis. US growth has remained feeble ever since post
recession and not likely to log a rate over 3% in next 12months or so. Despite
that commodity prices have surged in past one week at most frantic pace in
recent history. Brent crude has jumped over 42% since lows of 20th January
2016. Copper and Iron Ore are not behind.
So, is the sharp rally
in March is just a caper in a longer bear market?
Would be glad to have readers' thoughts on this. I shall be
sharing my thoughts on this later this week.
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