Synopsis
The way the market reacted to the GST rate rationalisation clearly shows that “sell-on-news mode” is still active. Now there are two reasons why the market has been in this particular mode. First: Some risks are still on the table (the India-US tariff tiff). The reason why we consider this a risk is that the 50% tariff cannot continue for long. Either it has to be settled, or it will escalate, with more goods being impacted, or even higher tariffs. History suggests that usually such wars don’t start easily. But once they do, ego is the biggest hurdle to a solution. So, unless this is resolved by year-end, it will become an even bigger issue. The second reason: Valuations. However, GST brings some hope. We may see better top and bottom lines in some segments.
Nothing can be ruled out on the street. So one should be prepared for anything. Now, what is the probability that volatility will remain high for some time to come? Given the way the market has panned out in the last couple of sessions, it is surely high. But then investing is not about the short term, it is more about the long term. In such volatile times, where the trigger is external and the response of the government has been extremely
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