Editorial

Stocks zoom due to Trump, Xi

By Nagaland Post | Publish Date: 12/18/2019 10:47:41 AM IST

 The stock market and economy are going on opposite directions. The economy is sinking. The stock is zooming. The sensex was at 41,352 on Tuesday and with gains of 106.9 points scaled a peak of 41459 on Wednesday. In two days it has risen by 522 points. The sensex is of course a mere 30-share indicator but the broader Nifty also reached an all-time high of 12,199. It surprises the nation. Who is investing in an apparently not so good an economy? The answers are not easy to find. It is all speculation. But it certainly is not an indicator for anything better for the economy. The central budget too has been virtually rolled back on many issues. It shows that the country can move virtually without a budget. Growth is sinking and negative factors are largely hitting the economy be it investment, bank credit or spending. In a situation the surprising factor is that foreign investors, largely portfolios, invested over Rs 1,000 crore in two days. It, however, does not suggest that the investments are real or for long term. These are short-term investments to rake in higher profits. It also should be noted that foreign investors have withdrawn earlier Rs 3000 crore in the past week.  Yes, the speculators and market players are buoyed by a temporary deal between the US and China. The global stocks showed improvement. India is not untouched. The signs of thaw in the trade scenario are benefiting companies having or expected deals with either of the two countries. Those companies are expected to rake in good profits and so the investors expect that their kitties would increase. Another factor is Brexit. The foreign institutional investors (FIIs) have also come back as the UK elections cleared the air over Brexit. But why should they come to India? One explanation is speculations decide the course of the Indian market. Even a small rumour can lead a zoom in Mumbai. The only positive Indian factor as punters say is the GST meeting scheduled for resetting the rates. For a few more sessions, the trend can continue. Since the domestic economy has yet to show strength, sustaining it may not be possible. The FPIs and FIIs are global players. They look for new pastures every day. Expecting them to have their funds invested in India for long may not come true. Short investments and gains in short term are sustaining the market. All the above instances show that US, China, Brexit are mere speculative instances that help gamblers make fast gains. Yes, the rupee has marginally gained but that is because some dollars have been poured - $ 2.5 as passive investment. It can fly out again in the coming days. But it may again come back for fast gambling before the year end. In short, there is little to enthuse though some may make small fortunes. The country does not gain much.

 

Launched on December 3,1990. Nagaland Post is the first and highest circulated newspaper of Nagaland state. Nagaland Post is also the first newspaper in Nagaland to be published in multi-colour.

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