Market Watch with the Big Bull of Ludhiana
We recently had a very candid chat with Mr Tribhawan Singh Thapar, chairman of LSC Securities Ltd. (prev. Ludhiana Stock Exchange) on the changing market conditions, his outlook on the markets, and of course (we just couldn’t miss it), bitcoin.
Read below for an excerpt of the interview.
Q1. What are your views on the phenomenal rise in the stock markets that we saw last year and more importantly how do you think investors should view this rise as something that is going to continue or something that is just a phase that will pass?
So, to begin with, I think you need to understand two things. First, when the markets crashed in March 2020 the weak investors oversold their positions in the market while the strong-headed intellects realizing the value in this mess went all in and increased their positions in the markets. Second, during the first wave, the whole supply chain went for a toss. Demand hit an all-time low for a period and our exporters were facing tough times as the export markets had vaporized in face of the uncertainty. This caused a huge disbalance of the demand and supply in the markets.
Now, that we have understood the two biggest events that occurred because of the first wavelet we understand the rise in the stock markets. So, talking about the first event when the smart investors went all in their increased buying pressure created a stimulus that pushed the markets higher. Secondly, while the initial evaporation of demand was a deal-breaker we also saw the demand for our exports rise halfway through the year as many of the western countries emerged from the first wave with a strong appetite to consume. This meant our business prospects were once again looking bright and this news further played a role in the phenomenal rally last year. Thirdly inflation was low, so people had surplus income due to decreased expenses and this meant there was surplus investable capital in the economy. With interest rates at an all-time low bank deposits weren’t a prudent choice for most and with the rising prospects of the Indian economy, people started pumping money into the markets. The increase in participation meant the stock markets were being pushed higher and higher as more and more investor capital flowed into companies. This further ignited the fire which then sent the Dalal Street rocket all the way to the moon.
Q2. So, what does it all mean for investors? What do the recovery and rise together mean for the average consumer who is looking to make a secondary side income in this pandemic boom of the markets?
Now, we need to play smart and keep a watch on our investments. We must monitor the socio-economic, political and capital market conditions to ensure we stay ahead of the game. Last year’s rally is no reason to say that companies will do well, and we need to churn our portfolio’s according to these conditions. The market is a very fluid institution and we have to be constantly on the watch and aware of the changing market conditions. Lastly, it is not bad to profit book right now at this peak in the markets. It is a good decision which many can decide to opt for.
Q3. Thank you for your response sir, I am sure your deep insights will prove vastly helpful to our viewers. And lastly, since bitcoin is the current hot topic what are your views on it?
I personally cannot comment on the prospects of Bitcoin as I am no expert in that field, but from the little, I understand and can gather from my experience I do not see any difference between bitcoin and poker. With the lack of concrete information about the financials and fundamentals of bitcoin investors are making blind decisions about not only bitcoin but also every other cryptocurrency. This is also why I perceive bitcoin to be just another form of gambling. It’s like a lottery ticket: there is an equal probability to win or lose because our ticket or cryptocurrency is not backed by any form of data. Plus, to further add to these woes we also cannot exercise the right to complain to any regulatory body about a cryptocurrency-related dispute as it is not a recognized asset class. This leaves us entirely on our own in case of any dispute or scam, which is not a favourable outcome at all.
Left to right: Mr Tribhuvan Singh Thapar, Mr Sharma, and Yours Truly