There is something about history. It often repeats itself. It has a pattern. Market cycles have a classic repetitive pattern too. Investors make the same mistakes cycle after cycle. Just that a new set of people come around with every cycle to make the same mistakes. Governance too follows the same pattern. Nations adopt new policies for years only to return to the old. Reversion in economic thinking happens all the time. As the world turns protectionist, governments have two priorities. Keeping their own domestic demand and investment buoyant. Enticing overseas investment. It remains to be seen how the world reacts to this new order where global trade is unwelcome but global capital is most welcome. It is in this milieu that every big economic idea will be tested very badly even before it gets enough time to prove itself. Yet, governments will have to bet on big economic ideas just to keep their economies going. Governments will still be running to stay in the same place. When India’s FM rises to present his budget, he would need to pitch aggressively just to make sure that India stands strong in the new era of de-globalisation. Importantly, he would be focusing on domestic confidence more than ever before. That is great news for every Indian.
Events and expectations lead markets into pricing every positive development in.