Topic Of The Day:-“Highs And Lows Of India’s Equity Markets
The rally in stocks is driven primarily by investor sentiments, not market fundamentals
The prospect of the National Democratic Alliance led by Prime Minister Narendra Modi returning to power has got investors in India’s equity markets all excited. Both the Nifty and the Sensex reached all-time highs on Monday as the indices appreciated 3.75% and 3.69%, respectively, the largest rise in percentage terms since September 2013. Though sanity returned on Tuesday with the indices shedding some of Monday’s gains, in terms of the number of points gained Monday’s rise was the largest in 10 years. This rally was after most exit polls released on Sunday predicted that the present NDA government would easily cross the halfway mark required to form the next government. The rally on Monday, however, was fuelled mainly by purchases made by foreign investors. Foreign portfolio investors bought shares worth ₹1,734 crore on Monday, pushing the rupee up by almost 0.7% against the U.S. dollar. It is worth noting that foreign investors were net sellers of stocks in the earlier trading sessions, causing the indices to fall significantly from their previous high that was reached in April. So Sunday’s exit polls may have caused many foreign investors to take a more positive view of the Indian markets. Domestic investors, on the other hand, sold shares worth ₹543 crore on Monday.
Monday’s record rally in stocks should be seen as one that was driven primarily by investor sentiments rather than by market fundamentals. As with any purely sentiment-driven rally, things can take a turn for the worse if subsequent events fail to meet the market’s expectations. There is very little in the form of market fundamentals to warrant the kind of exuberance shown by investors on Monday. Corporate earnings data released as of now for the January-March quarter suggest that earnings might actually witness a significant fall from what they were a year ago. Growth has also been slowing down in core sectors as consumer demand has failed to pick up and liquidityremains a concern across the economy. Still, investors may be hoping that things could get better in the coming years as a stable government at the Centre will be able to undertake economic reforms. While the fact remains that no big-bang reforms that could give a strong boost to economic growth have been implemented in the last five years, investors may still view the NDA government as less-populist than any other realistic alternative. Trade tension between the U.S. and China is another immediate risk that will determine the direction of equity markets, including India’s, as China tries to find new markets for products that it can’t sell to Americans. Given these various uncertainties, it would be prudent not to over-read the message in the stock market fluctuations.
MEANINGS AND WORDS
- Prospect
Meaning: the possibility or likelihood of some future event occurring.
Synonyms: likelihood, hope, expectation, anticipation
Antonyms:
Example Sentence:
- Alliance
Meaning:
Tamil Meaning:
Synonyms:
Antonyms:
Example Sentence:
- sanity
Meaning: the ability to think and behave in a normal and rational manner; sound mental health.
Synonyms: soundness of mind, mental health, mental faculties
Antonyms: Insanity
Example Sentence: “I began to doubt my own sanity”
- shedding
Meaning: (of a tree or other plant) allow (leaves or fruit) to fall to the ground.
Synonyms: slough off, cast, cast off, moult
Antonyms: grow
Example Sentence: “both varieties shed leaves in winter”
- predicted
Meaning: stated or estimated as likely to happen in the future; forecast.
Synonyms: Forecast, foretell, foresee, prophesy, divine
Antonyms: Ignore, Calculate
Example Sentence: “the predicted growth in road traffic”
- fuelled
Meaning: cause (a fire) to burn more intensely.
Synonyms: Power, charge, fire, stoke up
Antonyms: dampen
Example Sentence: “his resignation fuelled speculation of an imminent cabinet reshuffle”
- driven
Meaning: operated, moved, or controlled by a specified person or source of power.
Synonyms: Consumed, Directed, Forced
Example Sentence: “a chauffeur-driven limousine”
- subsequent
Meaning: coming after something in time; following.
Synonyms: Following, ensuing, succeeding, successive
Antonyms: previous, prior, former, prior to
Example Sentence: coming after something in time; following.
- exuberance
Meaning: the quality of being full of energy, excitement, and cheerfulness; ebullience.
Tamil Meaning:
Synonyms: Ebullience, buoyancy, cheerfulness, sunniness
Antonyms: gloom, meagreness
Example Sentence: “a sense of youthful exuberance”
- slowing down
Meaning: to be less active and relax more
Synonyms: Abate, Curtail, Decrease, Dilute
Antonyms: Develop, Grow, Lengthen, Go Up
Example Sentence: The doctor has told him to slow down or he’ll have a heart attack.
- liquidity
Meaning: the availability of liquid assets to a market or company.
Example Sentence: “the banks closed, causing serious liquidity problems for smaller companies”
- stable
Meaning: (of an object or structure) not likely to give way or overturn; firmly fixed.
Synonyms: Firm, solid, steady, secure, fixed
Antonyms: Unstable, rickety
Example Sentence: “specially designed dinghies that are very stable”
- implemented
Meaning: put (a decision, plan, agreement, etc.) into effect.
Synonyms: Execute, apply, put into effect/action, put into practice
Example Sentence: “the scheme to implement student loans”
- prudent
Meaning: acting with or showing care and thought for the future.
Synonyms: Wise, well judged, judicious, sagacious, sage, shrewd
Antonyms: Unwise, imprudent, incautious, extravagant
Example Sentence: “no prudent money manager would authorize a loan without first knowing its purpose”
- fluctuations
Meaning: an irregular rising and falling in number or amount; a variation.
Synonyms: variation, shift, change, alteration, swing, movement, oscillation
Antonyms: Stability
Example Sentence: “fluctuations in the yearly values could be caused by a variety of factors”
