This is what Samir Arora, Fund Manager, Helios Capital Management has to say, during the course of an interview to CNBC TV18. He was referring to analysts' comments on Fed Chairman's recent remarks about withdrawal of QE3. He further says:
"I am not feeling bearish, in fact I am feeling a bit disgusted. We in the finance industry are more a bunch of overpaid, under worked people who are all really intellectually superior but have forgotten the original purpose of finance." I can very well understand the anguish expressed by a fundamental analyst on the knee jerk reaction of the equity and bond markets world over. But that's the way markets behave, because they are driven on the back of liquidity in the system rather than market fundamentals most of the time.
"I am not feeling bearish, in fact I am feeling a bit disgusted. We in the finance industry are more a bunch of overpaid, under worked people who are all really intellectually superior but have forgotten the original purpose of finance." I can very well understand the anguish expressed by a fundamental analyst on the knee jerk reaction of the equity and bond markets world over. But that's the way markets behave, because they are driven on the back of liquidity in the system rather than market fundamentals most of the time.
Please visit my last post dated 31st May 2013, and you would know why I say this. In fact this reaction from the markets was overdue. And mind you this is only the beginning of a major correction in the markets, a rare scenario where equity, bond, and commodity markets have moved in the same direction - south wards. I had put the onus of our market movement on 3 major factors: global liquidity, India's economic woes and fluid political situation. Today's market reaction is mainly contributed to Fed statement on Global liquidity. The market is yet to take due cognizance of the other two factors.
In the days to come we could anticipate more negative reaction on India's economic woes stemming from a growing current account deficit (CAD) and a currency in free fall. FII figures in equity and bond markets have already turned negative. The political situation continues to be as grim as the flood situation in North India. I would like to re-iterate my opinion on the sudden announcement of mid-term elections pretty soon, especially after the self goal by BJP on NaMo's elevation, and its subsequent ramifications for polarization of many smaller parties under UPA. This may prompt the Govt. to go for early elections.
The markets will definitely react negatively to such developments, because they behave in an idiotic manner. But the ensuing fall in the markets would be a good opportunity to invest in equity for long term, as the risk-reward ratio would turn favourable once the markets dip below the 5500 level on Nifty and 18000 level on the Sensex. Investment in front line stocks from these sectors may prove rewarding: Oil & Gas (excluding OMCs), Pharma & Healthcare, Media & Entertainment & NBFC's (companies in race for banking licences). Await this golden opportunity to unfold sooner than later.
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