MARKETS SAYING, “DON’T WORRY, BE HAPPY!”

By Ruma Dubey

The markets are most certainly in a jubilant mood. NSE and the BSE are at all-time highs. Yesterday, the BSE Sensex closing over 30,000 was a huge thing.  The Indian rupee too hit a 20-month high at Rs.63.93, breaching the Rs.64-mark.

The reasons are not very far to find.

1: The earnings season, so far has been good. IT sector putting up a damp squib was expected so no major shocks there. Private sector banks have done well till now and PSU banks? Indian Bank did turn out a good show thus there is this hope that the worst is over and things are turning around for sure! Reliance Industries better-than-expected numbers went a long way in boosting the moods and so did the unexpected bonus from Biocon yesterday and Wipro announcing its bonus plans today. All in all, companies have been turning up a good show and that is one of the prime reasons for the markets to scale high.

2: Actually, the rising rupee itself has added fuel to the equity fire. The arbitrage opportunity which the FIIs get is also helping push up the indices. Its like this – if you bought $100 dollars some time ago at Rs.67/dollar and using that money, you purchased stocks. So when the rupee goes to Rs.64, you actually sell because when you ask your dollars back, you get back more. That’s the arbitrage advantage which many FIIs cash-in on. In the month of April, they have remained net sellers of over Rs.5000 crore.

3: More than the FIIs, the DIIs have been more active. In April, they have been big shoppers on the Street. They have pumped in nearly Rs.7000 crore and this to a large extent has helped. Thus in many ways, DIIs, for a change have fueled this run to 30,000 and not FIIs.

4: Currently there are no global negative clouds on the horizon. France elections have been very good for boosting sentiments all across. USA is also expected to get on to building its nation, create new employment opportunities and tax reforms. Thus, for now, there are no near term risks seen for the markets, from the global perspective.

5: Even within the country, the mood is upbeat. There is hope of a better future, hope of things getting better, nation building to take off, that GST will resolve many issues, that BJP has a miraculous wand to make everything right. Having optimism is a good thing, always.

Thus overall the moods are good and the earning season is like adding rainbow sprinklers to your triple sundae dessert.

Strangely, all these reasons existed even last week but today and yesterday, traders probably just decided to look at things positively. It is purely sentiments and currently the sentiments are very good.

How long will this last? The markets mood is compared to that of a woman, unpredictable. So now, it’s good, enjoy it. There is really no reason as of now for the markets to fall but knowing the market and the analysts, we will come up with reasons to justify a fall too.

It’s a game of sentiments. So have a good time as long as the good time lasts!