The Indian stock markets were paranoid at the very mention of the name of that country. If the tax concessions given to this country were to be withdrawn, the belief was this would damage our market sentiment beyond repair. So we were told. Successive governments failed to act on this parochial two nation tax treaty and remove its anomalies. Mauritius was to Indian stock market, what a super power is to its weak neighbour. Yet, Mauritius was no threat geopolitically to India. Finally, the Indian government decided to end this anomaly. The market’s didn’t really bother. Actually, the inflation data and the IIP data that came the next day did more damage than the Mauritius news. This is an interesting poster to the market’s sharp focus on domestic factors. In the coming days, the markets will keenly await more news on the monsoon. The rains will decide market direction and the intensity of the market’s move. For now, it seems like a boring wait. The good news is that monsoon expectations for the year are better than the previous two. Contrarian investors will buy into a market fall before the monsoon. The wait for the rains need not really translate into a wait to buy stocks.
The stock markets choose between crowdsourcing fear and crowd funding greed. In the end, it is the crowd’s game.