A season of low expectations- market wrap 73

Quick Edit: Randomness. The stock markets feel its omnipresence and know how it plays an irreplaceable role in changing market direction. 9/11, the financial collapse of 2008, the earth quake and tsunami in Japan are some random events which dramatically impacted global markets in recent times. The only thing that is constant in the stock markets is the power play of randomness. As an investor, one tries always to stay on the right side of randomness. You can’t anticipate anything. The only option is to respond to randomness when it happens.

Randomness throws events in front of us and situations arise due to irrational investor response. How you respond to these situations and turn them into an opportunity is what determines if you are one of those who ruled over randomness or got fooled by it. 2012 will see its fair share of events that will surprise us and throw our thought processes out of gear. As investors, we ought to be mentally prepared for these events that will present themselves before us. If you are caught unawares or unprepared, the trick is to quickly learn to turn it into an opportunity.

Impact:

The results season began with the Infosys disappointment. The markets punished the entire tech pack as expectations were lowered by the company through its muted guidance. The results of Reliance will be out by the time you read this. Reliance is not expected to outperform expectations and the markets will respond to a surprise, if there is one. The results season will gather momentum next week as more index heavyweights report numbers. The markets are glued into the guidance as investors struggle to set realistic expectations in a volatile global stock market. Global investors seem to have paused buying Indian equities. This is telling on the rupee. Expectations on GAAR need to be met if global investors are to resume buying. The coming week will see volatility continue to keep investors on the edge.

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