Thinkpad: 🚀🚀🚀
Markets dance 💃🏿 as central banks keep the music going 🎸 and investors flex their muscles 💪
Happy Sunday.
If you’ve run out of descriptors for the stock market rally, we're with you. So, we figured we’d do what the young ones do—speak in emojis. And the emoji description of this week’s big story is 🚀🚀🚀
The Sensex hit 60,000 this week. From the low of 25,638 on March 24, 2020, the index has surged 134% in 18 months. The last 10,000-point rally came in just over eight months, Bharath Rajeswaran explains in this story which charts the Sensex’s rise over the years.
Indicators like price-to-earnings ratio may seem irrelevant in today’s heady times but for those who still hold on to some of these fundamental indicators, Sajeet Manghat has the lowdown on how financial ratios stack up right now.
Undoubtedly, the most defining feature of the last twelve months has been the surge in retail participation in the stock markets. More than two-thirds (67.1%) of new investors in recent times have come from outside of Maharashtra and Gujarat, the two states that dominate stock market trading.
Looking for a musical version of events? How about some ‘Katrina And The Waves’...
♫ I feel alive, I feel the love, I feel the love that’s really real...I’m on sunshine, baby, oh...Oh, yeah, I’m on sunshine, baby...I’m walking on sunshine... ♫
When does the music stop?
Central bankers certainly aren’t hitting the pause button right now.
The U.S. Federal Reserve signalled that tapering of bond purchases will begin in November this week. The market, however, took comfort in the fact that the Fed remains data-dependent and interest rate hikes are some distance away. Locally, too, there is no dearth of liquidity and the RBI may risk falling behind the exit curve if it doesn’t start pulling back soon.
For the economically inclined, we had a couple of interesting conversations this week.
V Anantha Nageswaran spoke on the timid taper he expects from the Fed. At the first sight of trouble, the Fed will reverse course, he said. Locally, Nageswaran agrees it may be time to start signaling a reversal of liquidity. You can listen to that chat here.
JPMorgan’s Jahangir Aziz believes India’s central bank is juggling too many balls (again!) and is doing a reasonable job of it, “None of them have crashed,” he said in this chat. Aziz is far more critical of fiscal policy and the narrative around a V-shaped recovery in India, which he believes could lead to policy mistakes.
Somewhere between markets and macro is a theme that has quietly built up—a theme of growing investor activism in India.
We saw at least three important examples of investors asserting their rights this week.
Sony Pictures and Zee Entertainment agreed to a merger this week after activist funds tried to boot out the promoters. Did the promoters finally win? Did the investors? Or the Japanese? Andy Mukherjee had a worthy read on the subject.
Elsewhere, former Comptroller and Auditor General Vinod Rai’s reappointment to the board of IDFC Ltd. was vetoed by shareholders, who are upset about a delay in value unlocking. As Amit Tandon of IiAS said on his Twitter account, “There are no holy cows anymore.”
Even Reliance Industries Ltd. isn’t immune. The California State Teachers Retirement Fund has decided to vote against an independent director appointment to the company’s board, reports Sajeet Manghat.
Investors are channeling their inner Katy Perry maybe?
♫ I used to bite my tongue and hold my breath... Scared to rock the boat and make a mess...Get ready ’cause I’ve had enough...I see it all, I see it now....I got the eye of the tiger, a fighter...Dancing through the fire...Cause I am a champion, and you're gonna hear me roar ♫
Have a good weekend.