Since the impact of Covid 19 is likely to be severe on demand and consumption, do you think the market will see another fall? Which are the sectors likely to outperform?
- Harshad Mehta
Clearly, I don't have any answer to your second question but to answer your first question, I completely agree with your observation. But I don't know whether the markets will fall or not because we are getting this unusual surprise. The market went down in the month of March 2020 quite dramatically and thereafter, it has made a comeback and the market seems to be feeling very cheerful except for anything in the real economy, companies, employers or employees.
I have recently written a column The goat is gone wherein I'm trying to delve deeper and explore why the market is so cheerful. Is it because we were expecting the doomsday scenario, then and it was not turning out to be that bad? Maybe, it is much less bad but definitely not good nonetheless. So, that is why perhaps the market is cheerful. I was able to recall a joke in it which you'll find interesting and it'll give you some sense of why the markets are behaving the way they are right now.
But I completely agree with you that the supply, demand, consumption, everything is completely disrupted and it'll take some time to see any improvements. There is also a possibility that there could be a fundamental lingering impact on all these. I don't know when production will be at full throttle. I think we are still some time away from looking forward to the decent growth that we are waiting for. Equity markets rise in a sustainable way primarily when companies earn and grow their earnings. So, rising earnings are the primary driver of the equity market and I think that we are quite some time away from getting there. But it is still very difficult and there are far too many things happening in the world which has a bearing on the behaviour of the market.