Do you want to know how the stock market works, without getting bored by complicated theories and textbookish explanations? Let’s try doing this today!
As you may know, Yohani De Silva, a Sri Lankan singer, has taken the internet by storm with her Sinhala cover song Manike Mage Hithe. The song has claimed the number one position on the ‘Viral 50 Global Chart’ on Spotify and it ranked 5th on YouTube’s ‘Global Top Songs’ chart.
Similarly, the popularity of Indian equities is at an all-time high. Do stock markets and Manike Mage Hithe have anything in common?
Yes, their meteoric rises have some resemblance. Let’s find out.
The original music video was released in July 2020 which so far has got nearly 1.8 crore views and 1.68 lakh likes. Interestingly, Yohani’s rendition of the same song, which was released in May 2021 has received an overwhelming 14.5 crore views and 48 lakh people have liked it so far. Rebranding seems to have worked miraculously for the song.
You see, any popular song gets three important elements right—rhythm, melody and hook.
Manike Mage Hithe has a nice gentle ramp up. The melody is harmonically repetitive. And the rap of Satheeshan (who’s also the original singer of the song) creates a perfect hook for the song—making it an earworm composition.
Like most other popular songs, Manike Mage Hithe cover sets a perfect context. It’s short in duration, doesn’t have too many moving parts and creates a mesmerizing impact on the audience. Many comments on the song cover suggest that people who don’t even understand the lyrics have also liked the song—a crucial factor that has made it go viral globally.
Any popular market/sector or a stock has three factors working in its favour—story, fundamentals, chorus.
Initially, to make its way into the limelight, a stock or a market must have an underlying story which can be narrated in simple words even to a layman.
For instance, India’s journey towards becoming a USD 5 trillion economy and a manufacturing hub has been a story in today’s context.
India has strong fundamentals—it’s a democracy, it has the youngest population amongst major economies and has a burgeoning middle class.
Although the story and fundamentals have been in place for quite some time, what suddenly contributed to Indian stock market indices going through the roof? Maybe in this case too, rebranding has done the trick. Make in India becoming Atmanirbhar and the tag of an aspirant USD 5 trillion economy replacing the label of one of the fastest growing economies.
The rapidly changing business climate during the pandemic and a slew of economic reforms created a perfect backdrop. And the performance of India Inc during the testing times of the pandemic has worked like a perfect hook to the underlying story.
You see, hit songs are often similar to one another but have distinctly differentiating elements too. Yohani’s befitting expressions and the sweetness of the Sinhala language contributed immensely to the success of the song cover.
As far as the popularity of Indian equities is concerned, overwhelming participation of individual investors has been the differentiating factor this time.
Some songs become instantly viral but their popularity fizzles out equally quickly while a few others continue to do well for a long time. So is the case with markets; not all stocks that rise quickly become evergreen.
Markets go through phases—accumulation, ramp up, distribution and mark down.
In the accumulation phase, smart investors enter the markets silently when the market story and fundamentals are in a bad shape. As the clouds of uncertainty fade away, participation (the chorus) increases.
And in the distribution phase, the news is still good but markets plateau with smart money beginning to exit. Mark down is the last phase of a cycle where the prices move in a downward spiral.
Every phase has sub-phases.
Looking at the present market levels, it seems the accumulation phase is already behind us. Instead of taking a guess on how long the ramp up phase may continue, you should focus on stock selection.
Strikingly, a song isn’t said to be truly popular unless it reaches even a shoeshine boy, but markets start becoming jittery when a shoeshiner talks about stock markets.
Art breaks all boundaries and perhaps that’s why a song goes viral even when the audience doesn’t understand its meaning. But when it comes to stock market investing, it’s imperative to understand why you do like an investment proposition.
You may also like to read: Will IT stocks continue their strong performance post Q2FY22 earnings?
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The information presented in the blog could just be the starting point for deeper analysis that you might want to carry out on your own. You may also take professional help as you feel appropriate.
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We do not have any financial interest of any nature in the company. We do not individually or collectively hold 1% or more of the securities of the company. We do not have any other material conflict of interest in the company. We do not act as a market maker in securities of the company. We do not have any directorships or other material relationships with the company. We do not have any personal interests in the securities of the company. We do not have any past significant relationships with the company such as Investment Banking or other advisory assignments or intermediary relationships. We are not responsible for the risk associated with the investment/disinvestment decision made on the basis of this blog article.