WHY IS THE MARKET FALLING…ERR….RISING?

By Ruma Dubey

Rising crude.

Rising NPAs.

Falling bond prices and increasing yields.

Interest rate hike in USA

Monsoon normal or not?

Inflation?

Falling global markets.

Parlaiment logjam.

When a layman asks, “So why was the market up today?” one has to think and come up with a really good reason. China has become the de facto, all-round reason; it is like a one-size fits all kind of thing to explain down markets. 

And apart from China too, as listed above, aahh, the reasons are so many! The markets are so volatile, it has become a joke to actually look out for reasons as to why the market is falling or rising.

Last week, the fall in the markets was attributed to the doom and gloom which ails the PSU banks. And today, after a lackluster start, though nothing on the ground has changed since last week, PSU banks are cited as the reason for the over 500 points jump of the Sensex. The very same markets which had fallen like nIne pins when this issue raised its head, giving iT a nonchalant, “so what” kind of shrug, should not come as a surprise. Bounce back in sentiments? Value in an oversold sector? Contrarian buying?

Today, Marc Faber said that trade wars will leave a lasting impact and he expected a 20% decline and expects index at below 30,000. The market’s reaction? It did not care two hoots – it is up over 500 points.

The metals sector was the biggest loser on Friday after Trump and China unleashed a tariff war. But today, though that remains constant, MMTC jumped up 8.5% after Commerce and Industry Minister Suresh Prabhu said that merger of STC and MMTC is on cards and the matter is under process.

News of Reliance Inds taking over  Saavn Media (Saavn India), for cash aggregating to Rs.806 crore, led to all media stock shining bright in the limelight. With elections scheduled for 2019, the perception is that political campaigns from parties will bring in lots of ads for the media companies over the next 18 - 20 months.

So is today’s rise the correction of a bear market or Friday was a bottom out? Now that is like asking will the Opposition allow the Parliament to function or not? Somewhere at the bottom of your heart, based purely on fundamentals, it is apparent that this could neither be the end of the fall nor could today mark the beginning of a never ending bull run.

The end of the fiscal is near and this is going to be a short week. Thus volatility will be the norm. What we will witness is stock specific activity, based on news. Underlying sentiments remain good and in the coming months, RBI, monsoon and inflation will dictate the moods, like every year.

Yes, volatility is here to stay and we are left looking for reasons, both for a rise as well as for a fall.