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- Sometimes the action is within inaction and looks like market is (in)action right now, rising only for the sake of rising
- Back of the mind an element of worry is evident even among those people who I call veterans of market and let me be clear it’s different from being bearish. I’m not bearish I’m cautious
- While a brave front is being projected the final seat count at 240 for BJP and 300 for NDA has left a lot of questions unanswered for the market. Though in speaker appointment, sorry election there is a keen interest of market this time
- Victory of BJP nominee, former speaker Om Birla is a foregone conclusion but what we need to see is whether it’s NDA candidate getting more than 300 or INDIA candidate getting more than 235
- The index is rising to new highs by the day and y’day sensex hit 78k for the first time and nifty though with an a/d ratio of 3:4 ended higher by 180 pts. Not only the fatigue is evident, the market participants are also a bit low on confidence at the moment
- From 08042020 to 22062024 in the four years, the nifty has tripled from close to 8k level and even if we normalise the covid fall from 12k the index has almost doubled, a cagr of 18% post normalisation and 45 – 50% point to point a year
- A few years off and on tend to give a return in excess of 50 or maybe even 70% but expecting a yoy return of 20% plus is asking for too much. There has to be a logic we just can’t expect rates to fall on loans and rise on investments and if we continue to expect and get such high returns the overall interest rate structure can never fall
- Coming to gilts and debt market, the yields are more or less stable though it moved up by a bps on 10y but that’s part of normal course of business and even on a bit longer tenor the situation was same. The 50y paper also inched up a bps but definitely there is a demand
- Both the debt and equity are right now looking at budget and the political spectrum where it looks like the sailing will not be as smooth as it was during last decade. Government is fairly safe and will be functional to its best abilities as well but the absence of that freehand will surely hurt, so plan accordingly
- Internationally again the markets are broadly range bound and it’s only the wall street that is trying to consolidate while drifting apart. Dow was down over 300 pts while Nasdaq was plus 150 pts. There is hardly any movement worth a mention elsewhere
- Closing remarks – off the cuff – a rising market is relished by all and you feel proud but then somewhere the safety valve has to come into the picture to regulate excessive heat. For those who tend to believe that I’ve a bearish view on market take me as a safety valve
- Even I’ve positions in market but despite that I share a conservative view when it warrants simply because while trading I may tend to flow with the market but while writing I am bound to share a clear view
Stay safe, stay healthy, God bless you all, have a great day !!
Regards
Vikas
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Vikas Miglani writes 