THE HINDU Editorial Vocabulary - July 28, 2018 - Topic 2
Up, up and away: on
Sensex's new high
India’s benchmark stock indices are roaring
again, with the Nifty and the Sensex scaling all-time highs on Friday, crossing
the 11,200 and 37,300 levels, respectively. A result largely of increased
buying by foreign institutional investors and expectations of strong
first-quarter earnings results, it took the Sensex just 13 trading sessions to
move from 36,000 to 37,000 points. Coming after both indices witnessed
extremely sharp corrections a few months ago, the rally has occurred when other
emerging market indices have failed to recover their losses since the fall in
February.
The swift recovery, however, is not reflective of a secular rise.
While the sharp market correction in February hit stocks across the board, this
rally has been limited to a few pockets of the market. Heavyweight blue-chip
stocks such as HDFC, Reliance Industries, ITC, Tata Consultancy Services and
Infosys have contributed the most while many others have lagged behind. Almost
half the companies in the Nifty still trade below their 200-day moving average,
a sign of insufficient price strength.
The divergence in the performance of various
stocks becomes clearer when large caps are compared to smaller companies. The
mid-cap and the small-cap indices, which fell more sharply than the benchmark
indices earlier this year, are still trading well below their historic highs in
January. While the Sensex has gained almost 10% since the beginning of the
year, the mid- and small-cap indices are significantly down. Not surprisingly,
overall market capitalisation is still below its historic high reached in
January. The present stock market rally clearly does not yet mark a return to
the good old days when investors could expect multi-bagger returns by betting
on stocks across the wider market. Several stocks in the mid- and small-cap
category have fallen to levels reminiscent of a bear market. Investors are now
probably seeking safety in a few large-cap stocks that offer better quality of
earnings compared to untested and riskier smaller companies. The return of
foreign institutional buying also suggests that investors may be betting on
India over other emerging markets that have suffered more severely. It,
however, remains to be seen if mid caps and small caps will follow the large
caps and resume their journey upward. Else, the lack of sufficient breadth in
the wider market will presage an eventual correction in the large caps too.
Vocabulary
Roaring: obviously
or unequivocally the thing mentioned used for emphasis
Example: The
final week of Hamlet was a roaring success
Synonyms: enormous, huge, massive, great, very
great, tremendous, complete
Expectation: a
strong belief that something will happen or be the case in the future.
Example: Reality
had not lived up to expectations
Synonyms: supposition, assumption, presumption, conjecture, surmise
Indices: an
indicator, sign, or measure of something.
Example: Exam
results may serve as an index of the teacher's effectiveness
Synonyms: guide, sign, indication, indicator, gauge, measure, signal, mark
Contribute: give
something, especially money in order to help achieve or provide something.
Example: He
contributed more than $500,000 to the center
Synonyms: give, donate, hand
out, grant, bestow, present, provide
Insufficient: not
enough; inadequate.
Example: There
was insufficient evidence to convict him
Synonyms: inadequate, deficient, poor, scant, scanty, not
enough, too little
Reminiscent: tending
to remind one of something.
Example: The
sights were reminiscent of my childhood
Probably: almost
certainly; as far as one knows or can tell.
Example: She
would probably never see him again
Synonyms: in
all likelihood, in all probability, as likely as not, very/most
likely
Presage: a
sign or warning that something, typically something bad, will happen; an omen
or portent.
Example: The
fever was a somber presage of his final illness
Synonyms: omen, sign, indication, portent, warning, forewarning, danger
sign
