Auto-Correct at Work
The constantly changing narratives of the market got a Twitter jolt when the US President triggered the next phase of his tariff war through just two tweets. It caused tremendous anxiety in global markets as we wondered how things will play out.
The week that was, clearly saw Indian markets under the pressure of twin anxiety. Elections are still underway and at a very advanced stage. The continuation of the US-China trade war can disrupt global trade. India definitely can do without more uncertainties.
The trade wars are likely to be settled through hard bargaining and protracted negotiations. India will need to keep its interest safe through talks and bargaining. This is not going to be easy. We need to secure trade, energy, and capital flows. Our return to better growth hinges on these three aspects.
Clearly, the need for a stable government is now more compelling than ever before. The market knows this well and that explains the pervasive nervousness. The election results need to be decisive. The need becomes imperative given the continuing challenges faced by the economy. The stock market has seen too much polarity in recent years.
Concentration of market interest in a small cluster of stocks has distorted the markets. A clear mandate will see markets slowly eliminate this distortion. On the other hand, if we fail to get such a mandate, the distortion will be very quickly removed. Overall, these are very interesting times for investing and good temperament should be on its best display.