Skip to content

Mission: Changing Sentiments

December 7, 2008

Infusing trust is a tricky business. Changing investment sentiment is even more. Sometimes just a guise, a glance or a few symbolic words tells the markets that there is a floor under them. But there are times when the benign gestures fall flat with a sceptic market. These are some of those changes.

The Street is expecting a lot from the government tomorrow,to alleviate the tight bear grip,so prevalent these days. Yet, a package might not be the real answer. Of course corporates will need them, if they have to survive. But if the policy makers are looking for a better equity growth then, they will be really surprised.

Tomorrow PM, will announce an estimated ‘economic stimulus’ of  mega $15billion package. Aiming to infuse liquidity, credit infusion,giving a ‘support’ to sectors like exports,infra,auto etc. But what is seemingly missing from this entire game is an assurance of sorts, that it will be all right.

You see, investors dont really need a package. Give them enough confidence and they will do the work of the most efficient planning system in world. Mediating funds, efforts,attention,optimism and growth prospects between companies, projects and ambitions. But what is sorely missing is that ‘very’ assurance and a ‘supportive’ gesture that there is a firm floor beneath. Cases like, Sovereign Funds, Central Banks play an important role in sending across that message of ‘assurance’. But from what it seems, it will take some time before markets slap themselves for being so pessimistic, and collectively roars again. After all crowd psychology is no mature than a teenage running high on adrenaline.And rehashing the point made earlier, markets may want a credit infusion package, but its seldom what the market really needs. The truth is, markets themselves dont know what they want, something in the lines of the famous question, “What do women want?”. So you might hand the markets a credit candy when it cries for one, but what it really asks for is a gentle hand to bring it out of the fear and panic.

Advertisements
No comments yet

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: