Joining The Dots | Best Of Times, Worst Of Times: Take Your Pick

'It was the best of times, it was the worst of times.' It is a rarity for Charles Dickens to get quoted at a gathering populated by stock market veterans. But that's exactly where the famous opening line of A Tale of Two Cities was quoted to me, to describe the mood in Indian markets right now.

Those looking at the headline Nifty with varying degrees of disappointment and horror are perhaps missing what lies below the tip of the iceberg. This becomes obvious when you look at Nifty's 10.5% drop year-to-date, set against the Smallcap Index, which has grown 12% in the same period. In this same period, Welspun Corp has delivered a 228% return, Ather Energy has delivered 119%, and Data Patterns has delivered 84%.

But is there an opportunity here? Contrarian voices are now talking about the mouth-watering valuations that the 'most hated' largecaps offer, calling it an opportunity for longer-term investors. Feroze Azeez, Joint CEO of Anand Rathi Wealth, goes a step further, saying he has personally leveraged his own income to invest in the markets. This is in no way an endorsement of that strategy, merely a highlight of the conviction some market participants carry.

That conviction was clearly visible in the Systematic Investment Plan (SIP) number, which hit a record high of Rs 32,297 crore. The question is whether that faith will pay off.

If you are looking for reasons behind the dismal market mood, look no further than the price of oil. Brent crude has risen sharply this month, touching $108 a barrel, its highest level since the latest round of US-Iran hostilities began. The Bermuda triangle of high bond yields, expensive crude and a heavy pipeline of IPOs waiting to suck up liquidity is likely to keep cash markets depressed for a while.

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What's worse is the lack of the comforting TACO trade (Wall Street's shorthand for 'Trump Always Chickens Out', the pattern of swift policy reversals that has repeatedly calmed markets over the past year). Unlike the flare-ups of the last six months, we are yet to see a quick reversal in statements from the US president that typically brings short-term relief. It is also unclear whether the latest conflagration between the US and Iran will last till the US midterms in November, or carry into January of next year, as some reports suggest.

Meanwhile, Apple came out with its first foldable iPhone, the iPhone Duo, calling it the biggest change to the device in 20 years, seven years after Samsung got there first. The gobsmacking starting price tag of nearly Rs 3 lakh in the Indian market has been the biggest talking point. But considering it is the best of times, and the worst of times, don't be surprised if you spot plenty of people flashing the latest phone anyway.

That contradiction is, of course, where we came in. If that market veteran had been in a more generous mood, they might have quoted the rest of Dickens' iconic line too: "it was the age of wisdom, it was the age of foolishness; it was the epoch of belief, it was the epoch of incredulity; it was the season of Light, it was the season of Darkness; it was the spring of hope, it was the winter of despair." Take your pick, because every clause fits India's market right now. Wisdom, for the investor buying largecaps at low valuations. Foolishness, for the one financing a Rs 3 lakh phone on EMI. Light, in a SIP number that keeps hitting records. Darkness, in a Nifty chart that reads like a horror movie. Two centuries on, Dickens still has this market cornered. He just never had to deal with Brent crude.

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