Prosper and Shine, this Diwali!

Had anyone predicted in April of this year, that the NIFTY will record fresh highs in mid-November (of the same year) then the poor bugger would have been termed either a fool or a liar or both. In either of the scenarios, money managers would have been ill-advised to take such ‘far-fetched’ optimism at face value. And yet, here we are, with the NIFTY already up 5% from its record closings in January.

Attribution is another topic of discussion altogether. One can look back at ‘black swans’: the deluge of central bank (largely Fed-led) liquidity, Robinhood traders, stimulus doles and a new class of WFH speculators. While it appears so, this time it’s not (entirely) different.

The script remains the same, but the players are different.

Traditional heroes of the NIFTY’s last run to the top — like Banks and FMCG, with their penetration and consumption thesis, are shelved to a supporting role. Pharmaceuticals, healthcare, IT, and cyclical plays have emerged to become front and centre for the current surge. This speaks to the impermanence of winners in the markets. Animal spirits reflect their consolidated optimism in certain pockets while shunning others and thereby putting the wheels in motions. Brokers have many terms to describe this kinesis. We did too — the Great Rotation.

While the past week has been eventful — the US elections, Pfizer’s Vaccine results, Bihar Elections, and finally the stimulus 4.0 by the Govt of India to spur the economy from its slumber — it also leads us into the Diwali weekend. And India Etc., curbing its tendency to be verbose, will keep the sermonizing short.

Here’s wishing you and your family our sincerest greetings for the season. May we all prosper and shine… our portfolios included.