It is becoming increasingly clear that liquidity will be sloshing all over. China has signaled its intent to cut rates and raise liquidity. India has already raised liquidity and promises to cut rates. Both countries are letting their currencies fall. The US is acting tough on China and making trade tougher. China is bound to counter this move. Talks meanwhile don’t give a clear sense of when they will end or where they are heading.
But, the economic side of the trade war is worrying the world. We are not quite sure that the macroeconomic changes will be effective enough to stabilise our growth prospects. This is the current mood of the market.
Selling is still very much on. But, there is a good degree of selective buying going on too. The composition of investors participating in this discerning buying is very interesting. The demography is distinctly favouring older participants and market veterans. But, we have a surprise bear market participant in the retail mutual fund investor. The disciplined SIP participant is taking everybody by surprise. Investors lacking in confidence are tending to underestimate the SIP investor’s discipline. The coming weeks will test their conviction and those staying strong will upset the applecart of the doomsayers in our markets.
Clearly, we live in interesting times.