Over reaction to quarterly numbers and other events

The last few days have once again highlighted the malaise in the Indian equity markets - that of self styled market experts appearing on business channels and offering their (seemingly) unbiased opinion on any and every listed company on the NSE and BSE, often butchering the stock that just declared quarterly/half yearly/yearly numbers. The best of equity analysts in India too may not know as many stocks as these folks do, owing to the restricted coverage universe at each broking firm. But these market experts do!!

The Indian regulator introduced the concept of quarterly results as a check for erring companies and also as a move to improve reporting standards, in line with international practices. But unfortunately, self styled experts have been using these results releases to butcher a stock or lift another to the stratosphere, all to satisfy their own  whims and fancies, misguiding gullible small investors in the process. Though the concept of offering guidance about future performance could be held partly responsible for the expectation build up, the role of operators disguised as experts is higher.

The knee jerk reaction to results declared this week, the unwarranted and illogical upper circuit closures of SKS Microfinance, in response to the draft Microfinance Institutions (Development and Regulation) bill are a case in point.

Going by the way business news channels flash in centralized dealing rooms (CDR's) at broking firms and with gullible investors watching their demi gods dish out stock prescriptions, it remains to be seen how quickly people would identify the noise and filter it out.

Earlier the better.