DALAL STREET – A DETACHED OBSERVER

about 5 months ago
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We have a completely perplexing situation – track the stock market and then look at some national news on TV – you will feel that the market and the crisis are on two different planets; cannot be happening in the same country.  Take a look at these facts:

Shipping stocks have been scaling new highs

Metals stocks are soaring into the stratosphere

Pharma stocks have been the darlings for the past 15 months

Seasonal stocks, mainly agri-based are doing pretty well

Speciality chemicals are the “new” find

AMCs are much sought after

And needless to say, the markets are meandering – neither a crash nor a straight rise. The action we see on the markets is more stock-specific with mid-caps calling the shots. At this juncture, the market does not seem to know what to do.

What India is facing today is probably as big as what we faced as a country in 1947 or maybe, even bigger. The all-pervasive feeling of dread, a sense of gloom is all around us. The death toll, the rising number of cases, the groaning and moaning healthcare, the lack of leadership; we all are aware of all that is unfolding.

What is different from 2020 and 2021 or from the 1st and 2nd wave? The sheer reach and expanse of the pandemic. That changes the entire rhetoric. Last time around, the villages were largely intact and that kept the wheels of the economy rolling. But that has changed in the 2nd wave – rural India is very badly hit and that means our agriculture, the migrant workers and the overall rural demand is at risk. At this juncture, the doomsayer’s are having a good time as they keep on fear mongering, saying that the worst is yet to come and we need to be prepared for the third wave, which will be even worse. And this means there is a higher sense of worry, uncertainty and people are preferring to save all the money they can, as you never know what will be required in the days ahead.  

This is the feeling on the ground and what we see on the markets is different. Yes, unlike last time, there is worry – one does not know how long this will play out. That’s probably why the market is more muted, be it a rise or a fall. Life seems to be at a pause and the market is also taking it slow.

The market is obviously betting on the future and that’s good in a way – we need something to look forward to; everything cannot be gloom and doom.

The bottomline – the pain will be there for 3-4 months more and till then, lets all sit tight and buy good stocks (check out our Market Gossip, Multibagger, Big Gems sections). What we buy today will help us have a better tomorrow, hopefully without this shroud of corona.

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