Domestic data to set the tone for mkt

Under the shadow of the US Debt ceiling concerns, predictions of monsoon arrival, favourable macroeconomic data and global cues in a week of consolidation, benchmark indices-- NSE Nifty at 18,534 and BSE Sensex at 62,547- closed on a flat note. Nifty gained 0.19 percent from previous week’s close, Sensex added only 0.07 percent. However, major action was seen in the Midcap space with the Nifty Midcap-100 scaling a record high of 34,006.55. The index gained 1.6 percent during the week. Spurred by MSCI rebalance, FIIs were aggressive buyers for the whole of May investing Rs43,838 crore. It is pertinent to observe that in May, India attracted the largest investment among all emerging markets, and FPIs were sellers in China.

Listening Post: You’re Not as Good an Investor as You Think You Are

Are those who can’t remember the crash condemned to repeat it? Markets have been rising and investors returning to stocks, thanks to FIIs, a rash of takeover deals, the glimmers of economic recovery—and an epidemic of amnesia. Many investors have been behaving as if the bloodbath at the start of Covid pandemic, when most of the global stock markets lost at least 50 per cent, had never happened..

Financial planners report that clients are increasingly saying 2008 and 2020 were no big deal. Many have put the losses out of their memory and are eager to increase their return by adding more stocks.

“It just feels better for a lot of people” to forget their losses. You might think memory works like an engraving plate onto which events are carved in stone and preserved for decades, until they fade with age. In reality, psychologists have shown, memory works more like an Etch A Sketch, on which events are traced but then often altered or erased entirely. People are prone to “spontaneous distortions of memory that make us feel better about ourselves.”

Studies have shown, for example, that people remember voting regularly in national or state elections even when they haven’t cast a ballot in at least six years and that 71 per cent of students who earned D grades in high school later recall getting higher marks. One thing that might make some investors feel better about themselves is remembering that their losses were smaller or their gains were bigger than they actually were. That’s exactly the kind of polishing of the past that seems to be going on in many investors’ minds right now. Memory whitewashes mistakes, too.

F&O

Amidst heightened volatility in the week ended, markets finished the week almost near an unchanged line, as NSE Nifty closed above 18,500 levels, whereas Bank Nifty closed around 44,000. Options data indicates maximum Call open interest at 19,500 strike, followed by 18,600 and 18,500 strikes.