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- One word that sums up the market of y’day – Bee(a)rs butchered. Nifty hit an all time high of 22993 before closing with a gain of 370 pts. I don’t think there was even a single frontline counter that was under pressure. One can say the Budweiser has Fostered Carlsberg while the kingfisher was flying ultra high
- The rally was led by banking stocks as the bank nifty gained whopping 1000 pts and for once the joke going around was, as if entire INR 2.11 trln has come into the market today itself
- A rising market is a welcome move, everyone is happy to see the rise and maybe I misread on the day when nifty had pulled back from 21900, down 200 pts to close higher by 175 odd points the direction had actually changed but I still feel it looks like market has played a bit earlier than expected and there can be a chance of getting caught in the deep
- It is an open secret that even on return of BJP with absolute majority market believes that the upside will be capped, however any reversal in electoral fortunes may see a freefall down. Not only that foreign investors are still sitting tight with their short positions
- Unfortunately this euphoria is building up on two main pillars – our unbiased media and the university which we couldn’t attend in our youth where from now we want to graduate in the swansong of our professional career. Needless to say adding fuel to fire is Phalodi satta bazaar
- Though I’d said that post last Sunday I will not write on politics till June 4 but क्या करें, चुनाव के माहौल में राजनीति ही बाज़ार का मार्गदर्शन करती है and somewhere despite me not wanting to go political I’ve been left with no choice
- Often when I add an element of caution in my writing the same is not appreciated tagging me a bear and my political allegiance comes into question. I’ve always maintained that my political interest is only in markets and I live and write for that
- Why is it that the market is ignoring the fact that the vote percentage is dropping and if in a city like Mumbai we could barely touch 50% the joke hold true that repolling is a must because number of selfies uploaded is more than the actual votes polled and somewhere the fall out of that will be evident in the polls
- What happened suddenly after phase II that people started anticipating a gain of 20-30 seats for BJP in South. Is it that Jagan has lost his aura in Andhra that we are saying BJP + TDP will win 15 seats, if that’s the case what will happen to Congress and TDP, within remaining 10 seats
- Telangana market is saying 7-8 seats for BJP and Tamil Nadu 7-10. Full marks to Annamalai for having captured the opposition space vacated by ADMK but the work is still half done and there is way to go beyond Chennai, Rameshwaram and Coimbatore. One can say this planning may work for 2029 but it’s a bit too early for now
- Let me once again reiterate – 300 is outer for BJP and 350 for NDA and how I’ve arrived at this number. South is neutral. There is a loss of a seat in Gujarat, 2-3 in Rj, 1-2 in MP, 1 in Delhi, 2-3 in Haryana 1 in Himachal totaling 10 that will be offset by equal gain in UP where they will win 72
- Bihar there is a loss at NDA level 3-5 at least, Maharashtra also 3-5 at NDA level in Karnataka 5-10 at least and if they manage to gain in Telangana Andhra and Tamil Nadu it will just be covering that loss. So it’s back to 300 if south gains and to 290 if the Karnataka and Maharashtra losses are not recouped
- Time and again I say that in long term everything is perfect but markets can remain irrational for longer than you can remain solvent. There is no doubt that India as a story will continue and I will remain a dream merchant but very often I adopt the middle of the road approach just because speed thrills but kills
- I need to comeback on RBI dividend also. There is a euphoria that the amount is INR 2.11 trln which is a welcome development but this is not the first time RBI has given exceptional dividend; in the past also more particularly twice in last one decade the RBI has declared extra dividend and reverted back to normal amount with normal growth in previous years. Let’s appreciate but not turn euphoric
- I have a feeling that if in a day we’ve seen a rally of a week the market should start to rollback a bit from here on going upto June 1 when a fresh build up will begin with the expectation build up with exit polls
- Going international while I read somewhere that by 2028/30 Dow may scale the 60k mark but for now even at historic high Dow is not offering that comfort. As we finalise the write up Dow is trading down 480 pts and the near term macros continue to remain under pressure
- Gold had deep cuts overnight as the yellow metal dropped to USD 2350 losing 50 dollars and even silver was under pressure. The US treasury yields are also elevated at 4.48% on 10y but mortgage rates have come off towards 7%, something that had gone up above 9% a few months ago
- Another reason for me to worry about Indian market is that right now we are focused only on elections and taking the euphoria to a different level. We may not be having a direct impact of global developments but at the same time we are not decoupled as well. Suddenly post election we will start looking at these factors and find ourselves behind the curve. That may also put a drag on market
- Closing remarks – off the cuff – one has to be realistic while making the expectations. If you build up high expectations and that doesn’t play out you tend to feel shortchanged but if you’ve low expectations the positive surprise has it’s own fun. This definitely applies to seat projection for the ruling front right now and the mantra always in life
Stay safe, stay healthy, God bless you all, have a great day !!
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Vikas Miglani writes 