Uncertainty Has No Antidote !
Over the last five trading sessions, what we have experienced, it’s clearly one of a kind! Mr Market has taught everyone that we should never underestimate the ‘uncertainty’ as there is no antidote to that. To further understand this point, I would like to quote an American author David Levithan, “The mistake is thinking that there can be an antidote to the uncertainty.” Keeping aside Friday session, where Nifty experienced emotions like fear, hope, ecstasy and greed, all were on the display in a single trading session amid Nifty experiencing the biggest intraday recovery after being locked in 10 per cent lower circuit. Every day, the market is bleeding red like there’s no tomorrow because the participants are clueless and have no idea where, when or how they are going to come out of this uncertainty situation. Within three subsequent sessions, Friday’s low was not only touched but also broken pretty convincingly. Our markets kept sinking like Titanic and slipped below 8,000-mark on intraday basis.
The government and central banks across the globe are trying to combat this virus as well as trying to navigate the fear of recession, which many believe is on the shores by announcing stimulus and rate cut. In a bold and emergency move, Federal Reserve lowered interest rates to near zero. But honestly, nothing is working at this movement to calm the markets as fear and panic are very powerful and make people act irrationally. And this panic is certainly being seen as INDIA VIX is trading at elevated levels at 12-years high. The panic among the wise investors or the market participants is that if we do not find a cure to this virus, the global economy could probably move from a recession and land into depression.
In the commodity sector, crude oil is reeling from the twin forces of historic amounts of supply and an unprecedented demand shock. Crude is trading around $22-23 per barrel.
With travel restrictions and slowing down in industrial activity, demand for the overall fuel has seen a dip in India by 10-11 per cent in the first two weeks of March, as stated by the major domestic refiner to media. The safe-haven gold is also on a downhill amid the scramble for cash.
While as a reader, I’m sure that poisonous and scary headline are served to you on daily basis at your breakfast table as panic has become the trending topic of the town, resulting in instilling more panic among the readers. And, this line is best represented in a famous dialogue from movie named Pretty Woman where Vivian said to Edward, ‘The bad things are easier to believe. Haven’t you noticed that?” Let’s look at some of the promising and silver linings in the dark cloud of the recent times that would support the markets on their upward journey, whenever it begins!
☛ As informed by Chinese officials that no new cases of Coronavirus were reported in the epicenter of Coronavirus outbreak.
☛ India’s current account deficit narrowed sharply to $1.4 billion or 0.2 per cent of GDP is Q3 of 2019-2020.
☛ To fight the pandemic, governments across the world is taking urgent measures.
☛ At a press conference held at Delhi by Indian Council of Medical Research (ICMR), it was said that there is no sign of community transmission, which is at its third stage.
Coming back to the million-dollar question, are we nearing to a bottom? History suggests that the first bullish barrage in any bear market is fired by the bears. It is their profit booking in their short positions that is likely to initiate the arrival of a rally as followed by a cool off in the fear indicator i.e. India VIX. Till the time, it doesn’t happen, the volatility and dominance of the bears is likely to continue. While talking on the virus front, India so far, has been doing better than the developed economies as the country has upped its guard early and it’s a matter of time, the bears will run to cover themselves once panic recede and this should augur-well for the markets.
