Archive for April 25th, 2012

The Crazy Consumption

 

Most of the time we make a buy or a sell case, rarely do we look at stock market trends from a consumption point of view. Markets work with a multitude of external factors, consumption is one of them. But if the broad consumption trend is up, the society will not just gobble up cars, burgers and films, it will also gulp down stocks and investment ideas.

But then one may say that such connections are not linear, consumption is also about basic needs. Out of the 10 broad economic sectors around half are linked with direct societal consumption. The consumer discretionary sector includes stocks that sell products (or offer services) that consumers do not necessarily need (like consumer staples), but that they want. The consumer discretionary includes auto related, entertainment, home appliances, homebuilders, retailers etc.

Auto, FMCG, BSE Consumer Durables were the top performers since 2009. And this has not been just an isolated case for India. Even globally the consumer discretionary or retail ETF SPDR is the top performing sector. This means that society is not only consuming, it’s on a consumption spree.

A society does not consume because …

This article was written for Business Standard

Mail us for subscription details or download the report from our Reuters store.

Mukul Pal, is a Chartered Market Technician, MBA Finance and a member of the reputed Market Technicians Association (MTA). He has more than a decade of Capital Market experience dealing with derivatives and global assets. He has worked for Bombay Stock  Exchange, multinational Banks and brokerage houses in leading research positions before starting on his own in 2005. He is the President of the MTA Central and Eastern European Chapter.


The Crazy Consumption

 

Most of the time we make a buy or a sell case, rarely do we look at stock market trends from a consumption point of view. Markets work with a multitude of external factors, consumption is one of them. But if the broad consumption trend is up, the society will not just gobble up cars, burgers and films, it will also gulp down stocks and investment ideas.

But then one may say that such connections are not linear, consumption is also about basic needs. Out of the 10 broad economic sectors around half are linked with direct societal consumption. The consumer discretionary sector includes stocks that sell products (or offer services) that consumers do not necessarily need (like consumer staples), but that they want. The consumer discretionary includes auto related, entertainment, home appliances, homebuilders, retailers etc.

Auto, FMCG, BSE Consumer Durables were the top performers since 2009. And this has not been just an isolated case for India. Even globally the consumer discretionary or retail ETF SPDR is the top performing sector. This means that society is not only consuming, it’s on a consumption spree.

A society does not consume because …

This article was written for Business Standard

Mail us for subscription details or download the report from our Reuters store.

Mukul Pal, is a Chartered Market Technician, MBA Finance and a member of the reputed Market Technicians Association (MTA). He has more than a decade of Capital Market experience dealing with derivatives and global assets. He has worked for Bombay Stock  Exchange, multinational Banks and brokerage houses in leading research positions before starting on his own in 2005. He is the President of the MTA Central and Eastern European Chapter.