FALLING MARKETS, RISING OPPORTUNITIES

The markets have plunged today. The BSE is down over a 1000-points and the NSE is down over 280-points.

It’s the first day of the week and the punters do not know where to run for cover. But then, if the markets had galloped upwards relentlessly, these kind of down’s to catch the breath is a good thing. We cannot and should not have indices which move only one way. These breathers are essential as they go on to increase the depth of the market.

As we say time and again, the reason for the fall today can be conjured up like removing a rabbit from the magician’s hat. The rising cases of corona, the bond yields, the rising inflation. There is also talk of a lockdown coming in Mumbai in the next 8-days.

Well, if the markets were up today, the same reasons would have a different point of view – there are rising cases of covid but the Govt is taking steps to cull it before it becomes a full-fledged second wave. The lockdown of Mumbai – that’s not going to happen; there might be restrictions if the cases continue to rise as people’s attitude to safety becomes lackadaisical.

Now rising inflation is a real reason as fuel prices are shooting through the roof and increase in fuel price means a percolating inflationary effect all-around. But this reason was there last week too when the BSE soared well over 52k.

Why is it that when the markets are down consistently, bad and only bad news seems to come out from every nook and corner. The fact is that very same news pre-existed before the falling markets, the pessimism was always there but somehow, when the stock prices crash, this fall in overall confidence and negative news everywhere becomes all the more prominent. Is it that the poor markets are because of the negative news or is it that the negative news gains dominance because markets are negative? Egg before the chicken or vice versa; that’s the question, really.

That’s how perceptions are created; the media too senses the mood and publishes news which it feels will attract more eye balls in the given mood of the people. When the overall sentiment is not upbeat, it is only bad news which gets attention; anything good gets relegated to the junk; there is simply no mood to read or listen to anything remotely optimistic. This is how sentiments work – so right now when the moods are down, a good earnings or announcement of a liberal interim dividend will have no bearing. Companies do post good earnings but it is constantly compared with estimates and then butchered down saying, “below estimates.”  What we also see is that when brokerage houses put out reports, reducing price targets or downgrading, irrespective of the performance, the stock price will figure among the top five losers on the bourses. Ditto is the case when brokerage houses put out a positive report. Essentially, what this also indicates is that big brokerage/fund houses are the one’s who call the shots and that’s the simple truth.

The stock market, the pure icon of capitalism is moved purely by sentiments – economics, fundamentals and all other things come much later. That is the underlying truth – markets are driven only by sentiments.

A falling market is uplifting for the long term bargain hunter! You are simply spoilt for choice – so many stocks and so little money!

HAL, TCS, Vedanta, CG Power, Centruy Textiles, SAIL, GNFC, HDFC, Bandhan Bank are all great picks and keep a watch – every dip is a good time to buy.