I am observing the market for more than 40 years now and it never ceases to amaze.

It does the expected and suddenly the unexpected. One never knows why something happened though guys on TV will try to put a spin on everything.

RBI came up with another set of concessions to help the businesses tide over the present crisis situation.

The funniest part about these relaxations and earlier relief measures is that it permits banks to lend more and on easier terms to the borrowers. The banks are already sitting on huge NPAs in their normal lending. How these relaxed norms will make them more profitable. There could not be a surer way of throwing money down the drain.

It may be required for the businesses to survive but in no way it will improve the balance sheets of the lending banks.

But the market reaction was as if all the banks have suddenly doubled their profitability.

RBI Governor started the press briefing a little after 10:00 am yesterday and this is how the NIFTY moved.

A — This is between 10:00 am to 12 :00 hrs. The immediate reaction to the RBI moves was negative. From a open high of 9324, NIFTY had moved to below 9100 ( 9091.35 ) to confirm my earlier view that market always goes down after the event is over.

Next one hour was — doubts. It stayed within a narrow range.

B — At 13:15 market got some steroids injected and it reached 9300 level once again finally to close at 9266.75.

That gives rise to the question which can be asked everyday with change in the time mentioned.

Were the people stupid at 12:00 hrs or were they stupid at 13:30 hrs?

How the same set of market movers who made the market go below 9100 suddenly took it to 9300. What different analysis was available within one hour?

Or were they really stupid that they could not make sense of the measures in the first two hours?

Let us look at the chart of ICICIBANK for 17/04/2020:

It came down from the early highs as the announcements were made and was near the low point of the day around 12:00 hrs and stayed thereabouts till 13:00 hrs.

Then it sprouted wings and took off and made a high of Rs. 385.50 before settling at Rs. 375.55.

Well, this is what happens in the market. In volatile times logic goes out of the window and stays out. These stocks had fallen in a similar way not very long ago.

Where the markets may be headed now? :

Now this monkey being off the back –what next?

We may be seeing the Finance Minister coming up another set of relief measures for boosting the economy. Market may get some more cheer over next few days. Or it may not.

But the important points are:

Fiscal measures are for survival, not prosperity.

Businesses will somehow get through the situation; these measures are not going to make them viable or profitable.

Demand recession is not going away in a hurry. Even before the COVID -19 crisis, economy was struggling. The crisis has seen it crumbling and coming back to normal is going to be painful.

We may see occasional bouts of up moves thanks to cheer leaders ( media, government and RBI ) but market may not have seen the worst yet.

Let us brace ourselves for the tough times ahead and pray that the deadly virus goes away as soon as possible. We can pick up the pieces of market damage later.

Our trades were meant to go wrong yesterday and they did. We shall talk about that on Monday.

Enjoy the weekend.

Stay at home, stay safe, stay healthy.

Be back tomorrow.