Steeper Climbs, Riskier Terrain
A common daily headline in the media nowadays is about the Sensex touching all-time highs. Very few market rallies have been so ferocious. Stocks like Tata Motors jumping more than 20 per cent in just two sessions says a lot about the market frenzy. The rises are happening in a shorter span of time. This acceleration is a clear sign of the markets moving too fast, which is normally only seen close to the peaks. Simply put, what is pushing the markets higher is the liquidity coming in from the FIIs. Yes, no doubt, there is better-than-expected economic recovery and earnings but definitely none to justify the recent steep climb.
Basically, all market valuation theories, logic and philosophies have been turned upside down and overshadowed by the FII money flowing in. In fact, analysts are working hard to try and explain to their clients the reason for such rising prices. However, reality will strike when the FII money slows down to a trickle or begins to run dry. It could be a few months down the line or it could be just a few days away. If you are familiar or have read about reaching the summit of Mount Everest, you would know that the last stretch to the peak is called the ‘death zone’ where one needs oxygen support to survive.
Our markets appear to be entering this zone where the oxygen is the FII money made available. The sensible approach would be to gradually start reducing one’s exposure. However, if you are the type who believes in ‘risk hai toh ishq hai’ (famous quote from the ‘Scam 1992’ TV show) then you may want to stick your neck out for a longer time and enjoy the wild ride while it lasts. And given that the Union Budget is around the corner, we thought it might be an appropriate time to highlight what can be expected from it, and more importantly, where should investors focus now that the markets are trading at all-time highs.
In one of our special stories, we have studied in detail the performance of the low-priced scrips versus high-priced scrips. The story comes out with certain interesting observations which we think should interest the readers. In our second special story we thought it would be worthwhile to observe the performance of internet stocks in India. How do Indian internet stocks compare with the FAANG (Facebook, Amazon, Apple, Netflix and Alphabet) stocks in the US? If you want to find an answer to this question, have a look at our special story.
Last but not the least is the mention of the special feature where we have shared a list of the best business schools in India. We have featured the views of some of the leading academicians around the globe commenting on the latest trends in MBA education and highlighting why management education is essential in times like now. Meanwhile, the market is testing everyone’s greed trait. Do not get carried away! Stay level-headed, be happy with the gains in hand and spend more time identifying quality opportunities rather than blindly following purchases driven by the herd mentality. Stay tuned with us as we guide you through the roller-coaster ride the market is heading towards.
RAJESH V PADODE
Managing Director & Editor