Having been branded as a permabull, I find the current scenario very scary. The NBFCs have been virtually accounting for a third of the entire credit, which is no longer available. People have been clamouring for interest rate cuts but there is no transmission, says N Jayakumar, MD, Prime Securities. Excerpts from an interview wih ETNOW.
This has been one of those patches where no one is interested. The bulls are saying they have lost enough money and have no capital. The bears are saying how much short can we go because there is a limit to which markets will go down.It is much more than that. The reality is large trader interest have been completely driven out of the markets. For the first time, the Nifty is so far removed from reality -- be it the economy or the market as a whole or portfolio valuations of any kind -- that the interest levels have just dwindled. Today, the dissonance is even higher in Nifty because one is 5% away from life-time high. You expect if not exuberance, some degree of wellness or well being. But the portfolios are not reflecting it and this difference is only getting even more intensified as the days go by.
Once that kind of interest goes out, stocks are just finding any levels of any kind. There is no relationship between value and what stocks can go to. But it is also reflecting the underlying malaise in the economy, which is that for the first time, you are going to see quarterly earnings that are going to show de-growth in many sectors.
When you have large FMCG majors announcing profits, you almost know that they are trying to keep that growth going. This is a serious problem. Many pillars of the economy have been badly beleaguered. Everybody has talked about NBFC. I do not want to be a broken record early in the morning but the reality is everything in life -- be it credit markets or equity markets -- depends on two factors, willingness and ability. Ability is when you actually see money in your pocket and you want to spend and willingness is you feel like spending. That willingness to spend is not there today because there is no feel-good factor and the availability of credit is just not there.