Dalal Street lit up for Diwali
For the Indian stock market , the Hindu calendar Samvat
is a landmark event . The new year Samvat 2072 begins today as the country
celebrates Diwali , the most important festival for the Hindus . For the
business, trade and industry it is an auspicious day as they begin the new year
with hope for prosperity , worshipping the Goddess Lakshmi seeking her
blessings.
As the
economy hopes for better year ahead, on review, the Samvat 2071 has been rather
disappointing with the benchmark losing the most in the last four years , after
2011 when it had nosedived by 18 per cent. Surely, investors lost money in the
previous Samvat . So, it is no surprise for the diehard bulls telling investors
to stay invested and pump in more money in equity as an asset class. They have
been giving examples of how people made a rich bounty of 49 per cent in Maruti
Suzuki, 28.7 per cent in Lupin, 17.6 per cent in HDFC Bank and 16.3 per cent in
Infosys in the last 12 months.
They
conveniently remain silent on the fact that for every Maruti Suzuki, there is a
Vedanta where investors lost a huge 63.7 per cent. For every Lupin, there is a
Tata Steel where poor investors lost 52.5 per cent. For every HDFC Bank , there
is a Hindalco where the losses were as
much as 46.8 per cent and likewise there
was a painful wealth erosion of over 41 per cent in GAIL and ONGC, as per the
data compiled by the Business Standard newspaper.
It was such
an annoying thing to hear Chief Investment Officer of a leading asset management
firm on CNBC TV 18 say that the
investors should not bother what to buy or whether to buy or not, they should
simply ask: How much to buy and when to buy, painting such a rosy scenario.
Within 20
minutes, the same guy was speaking on another TV channel . Here he was very
particular and said “no, no” as long as investors know what stocks they are
buying , there is no problem, they will make money. At one place, he says investors can go and
just buy anything and then he goes to another channel and says, no quality of
the stock matters: God save asset under his management. No wonder, the Indian
Mutual Funds, supposed to be managed by professional managers have not really
performed well and won confidence of the retail investors.
Anyhow, if
you ask me how the Samvat 2072 is going to perform? There are several people who believe it is
going to be better than the year gone bye. Well, you can argue on a relative basis, yes.
But then, the stock market cannot be expected to be operating in isolation. As
long as there is a vibrant economy, the Sensex would show vibrancy. But if the
economy remains subdued, the market cannot beat the trend and be ahead of it
always.
At the
moment, the economic growth does not seem to be creating much of a confidence
thanks to a bad global demand, low consumer confidence in the domestic market,
heavy debt on the corporates and Narendra Modi government facing a hostile
political environment in Parliament, where it enjoys majority only in the lower
house.
Ironically,
there are not many choices for the investors – Gold and property also remain
subdued while returns on bank fixed deposits are declining. But in such a
situation, the investors would generally prefer safety over returns. My sense
is, retail investors would generally remain absent for the next few months . In
fact, they are difficult to return. And then, this protracted threat : Will Fed Reserve raise rate or not? Anyways, investors have few
choices- equity is not the preferred one .
Pic courtesy: BSE
