Double Trouble

The drama of the American Presidential polls promises to keep stock markets volatile for the next few months. Like politics, markets are acutely polarised. A large part of the polarity is political. Business houses which are favourably inclined to the incumbent party have seen their valuations skyrocket. Corporate actions at the higher end of the valuations range further bloated market the market caps of companies. This makes a perfect setting for disruption. Having said that, predicting when it will happen and what will trigger it is never easy.

The COVID impact on elections is just starting to play out. How the voters perceive these events and how campaigns spin it to their advantage counts. For the next few weeks, the markets will worry about regime change. The markets are definitely not ready for a regime change. This could well be at variance with the thinking among the larger constituency of voters.

Overall, we head into volatile times in the markets. News flows, rumours, corporate actions, fears, and trends will drive global markets for the next few weeks. Investing will need to focus on the post-poll and post-COVID scenario in the global economy. The dual impact can be as unpredictable as ever. That hardly makes an investor’s job easy.

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