Rosy days ahead for biz news channels

Rosy days ahead for biz news channels

FPJ BureauUpdated: Saturday, June 01, 2019, 06:39 AM IST
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After five-year lull, business channels are headed for bright days ahead on the back of rising equity market indices and expectations of a bull run over the next  three years, says A L CHOUGULE.

Bearish equity market attracts little interest from retail investors. Flagging interest in equity market is closely linked with sluggish viewership of business news channels. Ever since small investors’ interest dwindled in equity market in 2008, following the financial crisis in the US and subsequent Wall Street crash, followed by sovereign financial crisis in Europe, retail participation in equity market has been less than desired. Indian equity market went through long bearish phase between 2008 and 2013, thanks to the fall in India’s GDP from nearly 9 per cent to 4.7 over last two years, expanding current account deficit (CAD), policy logjam, high interest rates and stubborn inflation.

Fundamentally not much has changed, except tightening of fiscal deficit and contraction of CAD over last one year, thanks also to gradual decline in crude oil prices and stable government which has begun to act on policy front.  But after a scare in May last year on fear of US Federal Reserve tapering, it’s been a steady upward journey for Sensex and Nifty after September 2013. Incidentally, Narendra Modi’s name as BJP’s prime ministerial candidate was announced in September last year. Whether that had any direct impact on the rising indices is anybody’s guess, but certainly the market started making higher base for itself from early 2014. Despite the challenges of structural barriers, persisting food inflation and high interest rates, experts’ view on market has changed completely.

Now almost everyone seems to be gung-ho on equity market, except probably retail investors who, historically, are always the last ones to join the equity market party. Policy changes take time to have real impact on economy as fundamentals don’t change overnight. But what has changed is sentiment as market participants have given it ‘Modi premium’. As a result, expectations are rising and so is the stock market; it’s a matter of time before retail interest starts soaring once again as well.

Stock market is often said to be the mirror image of economy. But one key difference between the health of economy and equity market is that it is often ahead of time. When beaten up stocks like infrastructure and reality start rising fast, it often signals confidence in economic turnaround. When big market participants, FIIs, private equity heads and big bulls like Rakesh Jhunjhunwala and others confidently predict beginning of structural bull market on business news channels, it creates an impact on sentiment of viewers. After all, creating wealth through asset classes is a basic human desire common to most people.

There are as many as six business news channels – four English and two Hindi – that bring stock market action and price movements live in living rooms, Monday to Friday, between 9.15 am to 3.30 pm. With market share of 0.03 per cent of the television universe against 0.1 of English news channels, business channels rule over news channels during the day. There are roughly 40 million equity and about 20 million mutual fund investors in India and during market hours, a large chunk of retail investors are captive audience of business news channels.

 Gone are the days when investors’ only source of information about equity prices and indices was stockbroker and newspapers. Since the launch of CNBC TV 18 in December 1999, followed by others like NDTV Profit, CNBC Awaaz, Zee Business, ET Now and Bloomberg TV over last ten years, the last decade has been full of excitement as well as despair sometimes for retail investors. No matter how many times one has burnt his/her fingers in volatile trades, tumbling indices and two major scams of the financial markets in last 20 years, the lure of quick lucre (of equities), thanks to the equity cult that started in the early 90, has brought in its fold students, servicemen, housewives, businessmen, professionals, engineers and senior citizens, making them wealth creators and losers too.

Most financial experts are of the view that the market is headed higher and higher with targets for Sensex and Nifty around 28,000 and 9,000 respectively over the next six months. Predictions of the worst is over for Indian economy and beginning of a strong bull market over the next few years can be heard almost every day on every business channel. According to Karvy Stock Broking’s India Investment strategy (post-2014 elections) report, Indian equities are likely to outperform other asset classes as well as other emerging market equities based on expectations of a strong recovery in the Indian economy and corporate earnings. “This in turn would lead to an expansion in valuation multiples. At this juncture, investment outlook is very clear and positive for long term investors and we expect the Nifty to scale towards 9000 and higher in the next 12-18 months. For the domestic investors who under owned equities till now, this will provide an opportunity to increase the exposure in good quality equities from a long term perspective,” says the report.

The fact that Indian equity market has not seen even 10 per cent correction since February against as much decline in developed markets indicates that we are on course to scale new highs. Some analysts like Gautam Shah of J M Financials are of the view that before year end Nifty could hit 8700. Corrections are not ruled out and there could be one coming in post-December or post-2015 budget, as a few analysts feel. But, according to Jhunjhunwala, the equity market is headed for a multi-year bull run.

Clearly rosy days seem to be ahead for equity market which will, going by past bull runs, will result in higher participation of retail investors. It also means higher viewership for business news channels which perform the best when indices scale new highs, as was the

case between 2003 and 2008. If the

bull run continues business channels are probably headed for bright days ahead both in terms of viewership

and revenue.

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