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Tag Archive: Equity markets


I love this topic as I always say we love to forecast things and we all are forecasters,blog

When we think about changing jobs, getting married, buying a home, making an investment, launching a product or retiring, we decide based on how we expect the future will unfold.

Whenever the markets rise sharply the probability of forecasting to end the Bull Run increases sharply and vice versa in case of Bear markets.

Why people tend to forecast market so much? Don’t they enjoy the present?

Well those are behavioural questions and difficult to answer. But definitely people enjoy forecasting things.

Will the Sensex reach 30,000 or not is the question of the moment, and there are various views on it. Continue reading

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History may rhyme, it doesn’t repeat itself’ (Twain). Or that, “the only thing that is constant is change” (Heraclitus). blogThese two famous quotes apply to the financial markets as much as anything.

The way the mid and small caps in the Indian markets are trading gets to sense the equity markets are either at the start of a bull run breaking out higher or are on the verge of a break down lower.

Just correlate with layers 2007 and early 2008

  • Sub Prime issue was lingering in the mouths of traders for three years before the pain struck. Now, Greece is lingering for five years. Markets did not price in the Sub Prime issue. Now markets have under-priced Greece exit.
  • When the major markets peaked and languishing in ranges we have seen for about three months a surge in Indian equities (along with mid and small peaking to astronomical levels) then eventually Indian equities crashed.

 

Equity markets (specifically the market for large capitalization stocks) seem to be very different from other markets in that they areblog the only markets that are unconditionally liquid. The Basel Committee has officially recognized this – in their classification of 24 markets by liquidity horizons, the large cap equity market is the only market in the most liquid bucket. (Basel Committee on Banking Supervision, Fundamental review of the trading book: A revised market risk framework, Second Consultative Document, October 2013, Table 2, page 16)

There is abundant anecdotal evidence for the greater liquidity of large cap equity markets in stressed conditions – you may not like the price but you would not have any occasion to complain about the volume. For example, in India when the fraud in Satyam was revealed, Continue reading

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