By Ruma Dubey
The markets are lackluster….oh so listless!
That has been the mood on the bourses for some time now…it is always waiting for a policy action, either by Janet Yellen or by Rajan. That’s what it has all come down to. And if it’s not about these two, then it is about earnings.
Currently the market has three strong reasons for this somber mood.
1: First and foremost on everyone’s mind is Bihar. Apart from making it to the poverty, casteism or crime list, the state gets limelight when its election time. The market seems to already know the results due tomorrow – it has assumed that BJP will not win with a thumping majority mandate and that is the main reason why we are seeing this dull and down trading session today. But this is just its assumption; we still do not know what could be the outcome tomorrow. Exit polls are not always spot-on; thats what past track records have show us.
And a layman could very much ask the most pertinent question – why would Bihar elections matter to the stock market, after all it is not a Lok Sabha election, right? This is a significant doubt – there is no FDI going into the state, no big industry is setting shop there and frankly, its contribution to the GDP is not very significant. So why?
This is not really “about” Bihar in that direct sense. The stock market wants to see whether or not the BJP and Modi still retain the same magic, the same hold over the people. There are many who feel that it is now on the wane and this election , if BJP does not win will prove that. And that would make the Opposition stronger which as such has frozen the Parliament. The current love saga of “acche din” which the FIIs have also fallen for could be under threat. That’s why what happens in Bihar tomorrow matters.
India Inc Q2 numbers are pouring in and as expected, they are no great shakes. Wipro, Hind Zinc, Vedanta, L&T, Thermax, IOB, ACC, Ambuja, HUL, TCS, ITC, Infosys, almost all have disappointed. Most of the large caps have had a poor run – we all had low expectations but it came in much lower. And this too is having a collective effect on the markets.
3: Janet Yellen
Now this is one lady who has held the markets, not just India but world markets on tenterhooks for almost the entire year. Its been just a little over a week since Fed announced its policy – no change in rate cut. And yesterday night, there was a “hint” that rates might be raised in Dec. So why couldn’t she have spelt out very much the same thing a week ago? Why not a definitive timeline to end uncertainty like the way it was spelt out for withdrawal of QE? Today, world markets are down again on this “will she-won’t she.” So the US for all its ‘save-the-world’ image has been spreading uncertainty for so many months. It has literally held emerging markets at ransom.
China, for all its downfall a few months ago, has been having a good run for past two days. So how come this fact was ignored? It is all very selective triggers….as per what suits the moods then.