A week is a long time in the markets. With the smart turnaround in microcaps, small caps and midcaps, there is a palpable sense of urgency that is quietly replacing the negativity which pervaded market opinion. Investors who were disinterested in buying anything outside the performing dozen among equity shares are even putting out detailed notes in favour of small caps.

 

The structural shift seems to be causing clear anxiety driven by distinct fears of missing out (FOMO). This situation was clearly not foreseen by many market participants in December. But, how is this anxiety likely to play out?

 

The coming weeks will see budget-related speculation grow on market participants. With news flows happening at regular intervals and active media speculation on budget news, market speculation is expected to grow at a rapid pace. Investors must use the market speculation to their advantage and transform their portfolios to capture the structural economic recovery that will follow.

 

While it is very opportunistic to chase near-term trends, the bigger returns are clearly waiting to be made outside these trends. The structural opportunity will still be stronger than the recently troubled thematic opportunities. As we debate this point, the consensus opinion is clearly not seeing things that way.

 

This is the perfect setting for a contrarian strategy to be played on the Indian economy and markets. That calls for very strong guts and high conviction.

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