Predicting Stock Market

(Published in Banking Services Chronicle December 2008)

We are in an age when every Tom, Dick and Harry talks about the stock market and the Sensex. “How much is the Sensex at?” has become a question as ubiquitous as “What’s the score?” asked when India plays cricket. There are opinions and even convictions on how the share market will perform in the days to come.

But the men who really matter don’t seen to have a clue. Our economist-Prime Minister confesses he does not understand how the share markets behave. Our finance minister too takes recourse in highlighting the fact as to how strong India is on its economic fundamentals. The ship of the Indian economy is more or less on an even keel. It may at worst lurch but it won’t sink.

Who then knows about the stock market? It is a question perhaps as difficult to answer as the one about God’s existence. In the Indian tradition sages say that those who tell about God don’t really know about Him; those who know don’t tell. The share market knowledge too has parallels to the Divine conundrum.

Predicting the Sensex is much like astrological predictions. Charlatans abound in this realm. As one prediction after another is shattered when confronted with reality, people have started losing faith in the stock market pundits. Some say astronomy is a science; astrology is not.

Similarly, studying the economy is a science. Predicting it is not. Predicting the stock market is especially not.

In such a scenario it is very difficult to say who will salvage the world from the economic crisis. It is also difficult to say who will spark hope at the end of the tunnel seeing which the stock markets may surge. Whether it is Republican McCain or Democrat Obama, both will find the going equally tough.

It appears only time will heal a sick global economy. Depression is a virus that goes away if the economy takes care of its health. But the virus doesn’t get out in a day.