Irrationality fuels markets
An interesting week saw significant divergence in the markets. ITC, a stock which significantlysupported the index in its sustained rise suddenly gave way due to flimsy reasons. The stock perceived to have benefited from GST lost said benefit to a rule change. But, GST did not change or add to its earlier tax burden, it just restored the status quo. Yet, the markets thrashed the stock to pulp.
Another stock, Reliance, which has been a weak participant in this bull run, ended the week at its all-time high. This was a surprise too, given that the stock has underperformed for the past several years. The trigger was new plans by JIO, which did not show possibility of revenue growth for three more years. This is something that should actually scare investors.
The side show, was the new all time highs for the bank nifty, the small cap indices, and the troubled stock pack. Strangely, the stocks which are roiled in the bad loan crisis of banks are outperforming the market in recent weeks by miles. Somewhere, the markets are turning more and more towards irrational stances. Clearly, these are exuberant times.
“Beware of little expenses. A small leak will sink a great ship.” – Benjamin Franklin