Do it yourself

The first half of the financial year FY26 has been good for financial and commodity markets in general. Despite elevated geopolitical concerns, renewed trade war, slowing growth in major economies and emerging deflationary pressures, stock market, crypto assets, and precious metals, and industrial metals performed rather well. Energy and soft commodity prices were lower, indicating good price control. The global central bankers accordingly remained on the easing path. India however was an outlier in the global context. Indian equities, currency and bond markets were one of the worst performers globally. South Koren equities were the best performing equities in 1HFY26. Chinese and German equities were other notable outperformers. Equity indices of the US, Japan, and the UK also recorded strong gains. The most notable feature of global markets was the sharp rally in precious metal. The central bankers across emerging markets accelerated their gold accumulation, in view of the geopolitica...

Financial Year 2024-25 (FY25), may be recorded in the annals of history as a watershed year for global politics, geopolitics, markets and the financial system. The events that occurred during the past twelve months have opened up significant possibilities for emergence of a new global order. Although the contours of the likely new global order are yet to begin taking a shape, it appears that fight for dominance over technology; endeavor to gain fiscal strength; interventionist democracy where the state exercises intensive control over citizens; and top priority to energy security would be four key characteristics of the new order. The markets began to take cognizance of the broader developments and oscillated wildly between the extremes of greed and fear during the year. However, thankfully, markets managed to close the year on a rather satisfactory note. Most asset classes – equity, bonds, precious metals, base metals and real estate yielded decent returns for the year. Moreover, as...

In the past seven trading sessions, the benchmark Nifty 50 has managed to fully recoup the YTD2025 losses, soothing the ruffled feathers to a large extent. The broader markets have also regained some of the lost ground, though the midcap (-10% YTD2025) and small cap (-15% YTD2025) indices are still in the negative territory. For the financial year 2024-2025, Nifty (+6.5%) has yielded a decent return, which is marginally lower than China (+12%), the US (+10%) and Europe (+9%), but much better than the other Asian peers like Indonesia (-11%), Japan (-6%) and South Korea (-5%). Broader markets in India are also positive FY25 (Midcap +8% and Smallcap +5%). Now the question is “how does the market look from here?”. I shall deal with this question in some detail next week. However, to close this financial year, I must say this. In my view, the collective wisdom of the market in India has appeared to have assimilated all the known events and anticipated developments regarding the economy and ...

Recent interaction with the market participants indicates that the sentiment of fear is now strongly dominating greed. Most of the investors/traders are complaining of pain in their respective portfolios. Indubitably, the portfolio values have corrected noticeably from their September 2024 high levels. However, the damage is far less as compared to the previous major bear market, which lasted for almost thirteen months (2008-2009), followed by a 20-month period of recovery (March 2009-November 2010) and a three-year period of consolidation (November 2010-October 2013). We had a tentative two-year market cycle between 4Q2013 and 1Q2016, before the latest proper bull market started at the end of February 2016. Notably, this bull market has been the longest one (8 years); and it is still not certain that it has ended on 26 th September 2024. Pain-check In my view, the pain from stock price corrections could be of two types – absolute and emotional. Absolute pain occurs whe...

The sentiments of greed (risk-taking) and fear (risk-aversion) are two key factors that determine the breadth and depth of the stock market performance over a short term. In the risk-averse phase usually themes like large cap, defensive, value, dividend yield, etc. lead the market performance. In this scenario, the market breadth is usually narrow; fewer companies raise fresh capital; volatility is low; and market breadth is consistently poor. On the other hand, in the risk-taking phase, themes like small and midcap, growth, cyclicals, etc. lead the market performance. In an environment supporting risk-taking, usually the market breadth is strong, volumes are above average, and volatility is higher. The primary market is very active in this phase, as a larger number of entrepreneurs look to raise fresh capital for growth and deleveraging. The year 2024, however, has seen some divergent trends. Several contradictions prevailed, which not only raise doubts about the validity of the...

The first half of the financial year FY25 has been good for financial and commodity markets. Despite elevated geopolitical concerns, inflation, and political changes in many countries, stocks, precious metals, industrial commodities and crypto made a steady move up, though not without higher volatility. In 1HFY25, the global central bankers embarked on a path of monetary easing, with several of them cutting rates. Most notably, the People’s Bank of China (PBoC) and the Federal Reserve of the US, did rather aggressive easing. The Chinese (and Hong Kong) equities rose sharply in the last week of the 1HFY25 to erase months of underperformance. Indian equities were amongst the top performing global assets for 1HFY25. Japan, South Korea and European equities were notable underperformers. Another notable feature of global markets was the sharp rally in precious metal. The central bankers across emerging markets accelerated their gold accumulation, in view of the geopolitical developments and...

I find the current market narrative on social media being dominated by three topics: 1.     A study released by the market regulator SEBI, highlighting that 93% of traders participating in the Indian derivatives markets end up losing money. In the past three years they have lost over Rs1.8trn, trading future and option securities. Most of these were household (retail) traders, who declared an annual family income of less than Rs five lacs each. A few institutional and high frequency traders made gains at the expense of these retail traders. Intermediaries also gained substantially through brokerage and other charges. The market participants, observers and policymakers are now debating (i) whether the large players are manipulating the market to dupe retail investors; and (ii) whether the entry of small traders should be restricted in the derivative segment of the securities market. In the meanwhile, as per the SEBI survey, about 75% of the traders who lost money in...

The first half of the year 2024 has been good for global markets. Despite disappointment on rate cuts, geopolitical concerns, sticky inflation, and political changes in many countries, stocks, precious metals, industrial commodities and crypto made a steady move up with very relatively low volatility. A notable feature of the global market movement in 1H2024 was the stark underperformance of Asia ex Japan, even though the Japanese equities being the best equity markets amongst the major global markets. Brazil also underperformed despite a decent rally in commodities. Another notable feature of global markets was the narrow market breadth of US markets. Though the benchmark indices scaled new highs, it was mostly due to parabolic rise in a handful of technology stocks. At present equity markets appear strong on the back of a resilient demand environment, well anchored inflationary expectations and peak interest rates. Fears of earnings failing to match the stock price rise, escalation i...