The stock market has closed on a positive note a day after the Budget announcement nine times in the past 13 years. However, on July 11, 2014, a day after when Arun Jaitley has presented his first budget, Sensex hasn’t responded favourably to his pragmatic budget.
The lawyer turned politician P Chidambaram just loves to play the market and as always his North Block stint has given Sensex an unusual high. For the record his latest innings that began on July 31, 2012 has evidenced Sensex put up its best performance this year breaching the 19,000 mark on Thursday.
Low valuations and investor indifference might mean that markets surprise on the upside. This makes us believe that the current rally might have some steam left in it as sentiments are not yet fully upbeat.
Mainstream economics as it is practiced today, does have a lot of loose ends we believe. Little wonder, a lot of experts have begun to call it the dismal science. There are quite a bit of its principles that do not have universal validity. In other words, a principle that may work in one scenario may turn out to be a total disaster in the other.
As long as you keep your mind clear of biases and flawed thinking tendencies, and are able to think without the pressure of what others think and without fearing the loss of your social status, you`re very much on track to becoming a great investor.
The depressed sentiments and low expectations will pave way for optimism on any signs of turnaround in the economic situation. I believe that the “survival instinct” would play out among all the stakeholders of the economy, which could help bring it back on track.
The biggest learning in the last year has been for the present generation of investors who would not have seen such a long period of stock market underperformance and for whom the definition of long-term has changed.
If you look at either price-to-book or forward price-to-earnings ratios, emerging markets were relatively inexpensive until about 2007, at which point the gap narrowed, at least in part because investors came to believe in the idea that they could "decouple" from the low growth developed world.
Markets continued to go on a losing spree with benchmark indices in India falling further by 2.6 percent. As if the axing of the US rating was not enough, talks of a France credit rating downgrade lingered, chopping around 4 percent from global indices in a single day during the week.