In an otherwise gloomy health and economic scenario, the only place you can see a positive mood is the stock market. FIIs, DIIs and individual investors are buying stocks. The markets are going up little by little every day. Every one is in a party mood.
Sensex rising – It’s a FOMO party!
Investors are looking at their portfolios and the gloom + ‘end of the world’ scenario of March 2020 feels like it happened 100 years ago.
That’s the power of the daily ticker. It can suck your attention so much into the present moment that you don’t need any other meditation tool.
But my friend, you are wise to know this is not real. This is the effect of ‘maya‘.
Like you even I am wondering about the reasons for this sudden uptick. It’s a fool’s errand and yet I undertake.
Reasons stock markets are rising
1 Demand for products and services is back with a vengeance?
It’s crawling back…along with some pent up demand.
2 There are more than ever employment opportunities?
Well, unless it is hidden employment, I can’t see it.
3 Economists/Analysts estimate the highest GDP growth ever?
…Sorry, who does?
4 (make up your own…blah, blah, blah)
5 Salary cuts are restored, even EPF contribution is back to 12%?
Ummm…. I am not on a salary. Can you confirm this?
6 Migrants are returning to construction sites and other work?
…Last I checked, they are still going back to their homes in the village.
7 Low interest rates are making people buy houses?
Where are the low interest rates? Oh yeah, my FD got renewed at a lower rate.
8 COVID Vaccine is out and being administered?
…. OK, Confession. I was dreaming.
So, what gives?
The real reason stock markets are rising
The only reason I can see markets rising is the good, old FOMO! (Fear of Missing Out!) They missed March, April and then May. “I am not going to miss June.”
Before you punch me, I recognise that markets are forward looking animals. But you see the forward scenario is so unclear and the current liquidity so overwhelming, that investors can’t wait any more.
We all know the reality. Businesses are suffering and will continue to suffer for some more time. Some industries may not see revival before a few years. Some others will be wiped out (if they have not been already).
So, no, if you had come to believe that this a start of a fresh bull run…it is not.
Keep your hopes and your money in check. We have yet to see the results of this quarter to be announced in July/August. That’s where we are likely to meet the other side.
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