If any stock market index like SENSEX/NIFTY, is a tool to reflect performance of dominant/bigger companies from the major sectors of the economy, representing chunk of GDP of the country, then ideally it should reflect true health of the country‘s economy. But then there is a catch – because different players (Animals) in the stock market while making buying and selling decisions don‘t go by historical performance alone but also try and reflect expected performance of these companies in short-medium and long term. That is where it introduces speculative elements in the forecasting models which leads to divergent behavior. When experts forecast future, certain elements are foreseeable and certain elements are merely expectations which could be optimistic, neutral or pessimistic. It means, be it fundamental analysis or technical analysis that experts use are merely 10% indicators and rest 90% is taken care by disclaimer – “Stock Market investments are subject to market risks.” It means experts are not responsible for their advice. Then why can‘t other professional like doctors, architects, engineers claim so? A true professional will always endeavor to reduce the uncertainty zone into a certainty zone.

Let us try to draw some inferences from this data –

1. 3 weeks before the actual lockdown, market was at high – so no wind/clue of Pandemic affecting India – when 40 countries had reported COVID 19 cases and India had already reported 3 cases. (WHO Reports)

2. On the last trading day before lockdown date, market failed by nearly 22% – would you call this as discounting the information? It is more an insider information which select few fund managers (FIIs) had, who could offload their holding and make killing.

3. In 3 months – as on 21.06.2020 – markets recovered by nearly 16% i.e more than 2/3 of the previous level. Why such an increase/ in fact COVID situation in India worsened – crossed 4 lakhs mark with doubling rate of about 10 days. Spurt in SENSEX/NIFTY It is mainly due to positive FII inflows. It is difficult to understand when doctors, scientists, policymakers – none of them had any clue when the curve of COVID Patients will flattened, whether it is stage 2 or stage 3 of Pandemic Phase, when we will be successful in getting the vaccines but the so-called investors very up beet about India. Only positive could be that India started 1st unlock down phase. But it cannot be the sole driver.

The magnitude at which piracy has grown, surfaced the insurance industry. Thereby, any episode in these shipping lanes is an attention seeking event for the extractive (oil and gas) sector and is immediately noticed by the insurance industry. It is well noticed by the people in power that oil in West Asia is a crucial factor in the running of global industries. Oil is an easily traded commodity, and the Gulf countries have been trusted suppliers of oil, especially for Asia. Between 2002 and 2012, China accounted for just under 50 per cent of world oil-consumption growth (or nearly 75 per cent in combination with India and Southeast Asian countries), compared with -30 per cent for the European Union and the US, taken together1

So the mute questions are –

1. Whether stock market indices really indicate health of any country‘s economy?

2. If importers and exporters are subject to strict compliance regime then why note same yardstick applicable to FII and PN investors?

3. Why not investments originating from tax heaven nations be subject to more close scrutiny?

4. Why can‘t we encourage FDI from tax heaven nations?

There is a room to believe that SE indices move in the pre-decided direction and then a reason is attributed to such behavioral movement rather than vice-versa situation.

Let us try and find similarities in IPL and stock market indices –

1. Possibility of big and strong Franchisee Owners winning IPL titles more no. of occasion is higher like in case of big fund managers with their financial muscle power on stock market performing better than others thereby yielding better results. So insider information trading is necessary evil for fund managers.

2. Government gets piece of cake in the form of taxes and other levies irrespective market going up or down AND irrespective any team winning and losing.

3. Players get handsomely paid for winning and losing both irrespective of results like in Stock markets fund managers, brokers, advisors credit rating agencies are paid irrespective of market going or going down.

4. It is safe game to bet on dark horse in both the games of stock Exchange and IPL whereby betters and players both are in win-win situation and poor public pay for it. (otherwise why Jaydev Unadkat should get highest bid than ABD, MSD, VK to name a few)

5. In both games emotions of general public is capitalized by select few to make killing for themselves and in the process if others get to earn, then nothing like it.

6. If game of chance is a pre-dominant element in both the businesses then why IPL is in the entertainment industry and Stock Markets are economic barometers of the country?

7. If stock markets have regulators then why not IPL like entertainment, should have regulator?

If Credit Rating Agencies mainly consider historical data and fundamental analysis as tools for arriving at ratings then how can we depend on such ratings for investments be it in equity or in debt which is largely influenced & distorted by future uncertain and emotional events? No wonder corporations have fallen; frauds are committed irrespective of credit ratings awarded by such companies. (Case for discussions could sub-prime crises, Satyam fraud)

If market pricing of equity/debt itself is based on lots of speculation and discounting of future then one can imagine ̳Derivatives‘ for which underlying assets/security is equity/debt, is nothing but next level of betting and gambling but because it enjoys statutory recognitions, it is a white collar game with status symbol.

So, is it long overdue to change the perception and outlook at Stock Markets to be the true economic indicators and barometers of any country‘s health and soundness?

No wonder FII/PN are termed as ̳Hot Money‘ and has nothing to do destination country‘s economic health, its development but everything to do with how one can earn and safely take it out of that country. Whereas FDI will not only ultimately look out for return but also stay in that country through its thick and thin. And also contributes in some development of that country.

If in IPL – entertainment game also, some of the Franchisees are disqualified and driven out of game then all the more reasons players whose business plan is not in the interest of country‘s economic goals, strategic goals and top of it National Interest, should be driven out before they cause damage to other players and still remain elusive. And for identifying such black horses, to bring them to the books, it does not require any complicated models and tools but a strong WILL.

So, its high time, the Regulators to look at Stock Markets as not a game of entertainment but regulate all the players with fair scope of earnings which is aligned with country‘s economic health and its National strategic goals.

Both stock Markets & IPL are not bad if you know what to gain and what not to lose. When you lose in stock market, you should watch IPL AND when you gain in stock market you should avoid IPL. No issues if you can‘t become Warren Buffet, but at least walk on the path laid by him and follow his principles – ―You can’t produce a baby in one month by getting nine women pregnant,‖

should gain patience and lose greed. All is not bad in stock market especially if you use little prudence and sale when market is going up and buy when market is going once it touches threshold gain or lose limits.

All said and done one must not forget that ―.....in INVESTING, always remember that Rome was not built in a DAY.‖ And ―—— in TRADING, Hiroshima and Nagasaki were destroyed in a day.‖

In the words of Mr. David Rosenberg, Economist, In the current Pandemic global situation – there is nothing normal – where is the question of ̳New Normal‘? It seems it holds good for Stock markets for ever.