At a time when the stock market has been shaken and stirred, let us put before you an intriguing puzzle.
Stocks had done well till yesterday’s sharp correction because investors were quite sure that the good times would continue. Yet, a new survey on business confidence done for the apex Confederation of Indian Industry shows that this confidence has slipped yet again in this quarter.
It gets even more puzzling when the sectoral data is considered. The biggest drop in corporate confidence has been in the capital goods sectors (15.6%), while the smallest drop has been in consumer non-durables (2.8%). That’s precisely the opposite of what the stock market has been saying in these past few months. The prices of capital goods companies have soared while consumer goods have been trapped by gravity.
So who has a better feel of the future—the companies or the investors?