The headlines all across the world screamed the capture of Kabul by the Taliban. It filled the heart with a sense of dread and foreboding as “Taliban” in our minds stands for extreme fundamentalism and we do not know where this is heading.

And then we see the stock markets. Even there, we do not know where it is heading too!

The markets were beaming ear-to-ear and it remains well over 55,500 with a positive bias. The better-than-expected bounce back and companies expected to soon breach the pre-Covid levels is keeping the spirit buoyant. The further opening up in Mumbai has probably lulled one to believe that things will only get better.

Maybe. Its our human mind which is designed to always believe that what lay ahead is much better, much greener than where we are today. But with the pandemic, we don’t know. The third wave seems to be waiting, lurking between us with a smirk on its face, laughing at our naivety.

Yet, the market has pushed back all this and all memories of last year into some dark abyss in the mind and is looking ahead, thinking there will be bright sunshine in the foreseeable future. But, while enjoying this mood of exuberance, it is necessary to stay cautious as things are not yet as well settled as what the market wants us to believe.

The threat of the virus and vaccination not keeping pace is the biggest. We are seeing countries, even parts of China, currently locking down. We don’t want that here again and we can only hope and pray that we are better prepared this time around as more and more things open up.

And in the midst of all this, keep a watch on oil too. Currently it remains benign as the Delta variant has caused havoc, putting a spoke in the wheel of growth. But once things are on the rebound, which is what the Indian markets are looking at right now, oil will zoom up with doubled-up vigor and that for our imported-oil-dependent- economy, will not be good. This rise in oil prices is still a long way off but then so is a complete bounce back, isn’t it?

Despite all this, the fact remains that demand will pick up and in turn growth, if and only if consumer confidence grows. That is currently very low right now – again hinging on the third wave, with people preferring to hold-on to the cash in case of emergencies.

For the market, normalcy is when companies get their factories running but for those who run and work in the factories, normalcy is that when children go back to school and colleges, when there are more people working in offices and not all from home; when supply chains become as efficient as before Covid and when the sense of fear is left behind. And for this kind of normalcy to happen, there is a long way to go.

That’s why, in this market currently, tread with caution. Buy into stocks only if there is a surplus, post savings and that too for buying quality, strong stocks. Trading or “satta” in these volatile markets is not recommended for retail investors.

And the perennial question – are the stocks over valued today? Well, we simply cannot compare the rates of today with those 10 or even 5 years ago. All the dynamics have undergone a complete change; so, the valuation bar itself needs to move – like changing the base year for macro-economic data. Also, if you adjust for our cost of living, maybe, many stocks still have a lot of value left. The golden rule – keep booking profit; that way you will earn the value.

What happens if a much deeper, sharper correction comes in? It’s simple – if you are a trader, you will not have any time or very less time to exit but if you are an investor, sit tight or buy again on declines because what goes down, comes up with more vigor.