Stock markets: Going nowhere - Views on News from Equitymaster

Helping You Build Wealth With Honest Research
Since 1996. Try Now

  • MyStocks


Login Failure
(Please do not use this option on a public machine)
  Sign Up | Forgot Password?  

Stock markets: Going nowhere

Aug 16, 2000

Political instability, threat of aggression, slowing industrial output, weakening currency and higher fuel prices. Reading this one can be forgiven for being pessimistic about the prospects of the Indian stock markets. Our 54th year of independence has surely started on a weak note. Letís first go through the hurdles that a buoyant stock market is facing. The Kashmir issue has once again come to the fore and this time the threat of aggression is for real. Statements made by the Pakistani despot have only aggravated the situation. After having grown robustly towards the end of the last fiscal year, growth in industrial output has slowed considerably. A part of this could be attributed to a severe drought in several states. Further, business confidence has been eroded after the rise in interest rates. This will hit the already sluggish investment activity. Finally, with crude prices rising unabatedly (they recently hit a 10 year high), domestic fuel prices need to be revised upwards. This will increase costs and in an environment where demand is still not robust, this could hit producer margins.

All these factors (and more) have contributed to a state of pessimism in the stock markets. Foreign investors and domestic institutions have been averse to committing fresh funds. Mutual funds too have been relatively inactive. The markets as a result have been unable to hold onto any gains. This scenario is likely to persist in coming weeks.

But why arenít the markets reacting sharply to the stream of pessimistic news? That's because the Indian economy is fundamentally sounder than it ever was ever since it entered the slowdown in FY97. Forex reserves have risen sharply (they have declined in recent months owing to RBI's measures to support the Rupee) and so has the growth in exports. The current account deficit seems to be well under control. The fiscal situation too is better and, on the inflation front, the worst seems to be over. Investment activity in the infrastructure sector is finally showing signs of buoyancy even as policy initiatives of the government to step up the reform process benefit the economy.

So what we have is a mixed bag of news. The markets probably would not run up or down unless the situation becomes clearer. What we are likely to see is a market that, in market jargon, is Ďrange boundí.

Equitymaster requests your view! Post a comment on "Stock markets: Going nowhere". Click here!


More Views on News

An Important Hurricane Update for Energy Traders (Fast Profits Daily)

Sep 22, 2020

In this video, I'll show you how the extended hurricane season in the US will affect traders in crude oil and natural gas.

Mutual Fund Investors Will Now Be Allotted Units Based on NAV of the Day AMCs Receive Funds (Outside View)

Sep 22, 2020

PersonalFN explains how SEBI's new circular on mutual funds impact investors.

My Top Stock to Buy in this Market Selloff (Profit Hunter)

Sep 22, 2020

The recent correction offers a great opportunity to buy this high conviction smallcap stock.

How Much Money Should an Investor Set Aside for Trading? (Fast Profits Daily)

Sep 21, 2020

In this video, I'll give you a simple equation which you can use to decide how much money you can set aside for trading.

Kotak Standard Multicap Fund: Strategizing Growth with Focused Approach (Outside View)

Sep 21, 2020

PersonalFN's analysis on the features and performance of Kotak Standard Multicap Fund.

More Views on News

Most Popular

How the 8-Year Cycle Can Help Identify Multibaggers (Fast Profits Daily)

Sep 11, 2020

This is how you can apply the greed and fear cycle in the market to pick stocks.

Why We Picked This Small-cap Stock for Our Hidden Treasure Subscribers (Profit Hunter)

Sep 17, 2020

This leading household brand will profit big time in a post covid world.

This Could Be the Best September for Auto Stocks (Profit Hunter)

Sep 11, 2020

Here's why I think this month could be a great for auto stocks.

What Do the Charts Say About Buying Smallcaps Now? (Fast Profits Daily)

Sep 18, 2020

Everyone seems to be excited about buying smallcaps now...but is it the right thing to do? What do the charts tell us? Find out in this video...


Covid-19 Proof
Multibagger Stocks

Covid19 Proof Multibaggers
Get this special report, authored by Equitymaster's top analysts now!
We will never sell or rent your email id.
Please read our Terms


Sep 23, 2020 09:09 AM