Good times better stay

First came expectation and then followed euphoria. The benchmark Sensex has hit a new high and is up 25% from end-February, the month where most opinion polls started projecting a ‘majority’ for the National Democratic Alliance. The market tends to discount news — good and bad. Though in the current liquidity flush global environment, how deeply does it discount bad news can be questioned.

As businessmen and investors look forward to the maiden Budget of the BJP government, sentiment is positive to the extent of being forgiving. The broad belief is that there will be ‘decisive action’ and even if there isn’t, it is early days to be demanding.

The stars, then, seem perfectly aligned. We have a forceful majority at the Centre, the RBI governor thinks there might be enough room to lower rates if consumer price inflation continues to taper; the European Central Bank might lower rates further thanks to deflation fears and China is already making encouraging noises about its attempts to steer its gargantuan economy to a soft landing.

Have we then reached the Promised Land or are the stars aligned a little too perfectly? In the past, too, the administration has squandered ample opportunity and the most dangerous words in investing always have been: “This time, it’s different”. The anticipated run-up to 24,000 meant that while investors were jubilant, they did not fall over each other to push the Sensex towards the upper circuit on the day the overwhelming mandate became clear. 

That said, most investors, Indian as well as foreign, reckon that we are now on the cusp of never-ending riches. Samir Arora is among them and believes that good times will continue as the new government unleashes its magic. However, it takes all types to make a market and even in these hyper-hopeful times, there are some who are refusing to wholeheartedly bite: Neelkanth Mishra is watching the revelry from a distance. This issue’s cover story draws on the depth of experience of both Arora and Mishra to get a sense of where the market could head from here on. To know the reasons why they feel what they feel, read The long and short of it and Hush on the shop floor