Introduction

Hello, everyone! This blog post is all about the current volatility of the stock market and also highlights five trending stocks that aren't talked about enough. This article exists to demystify the complexities of the stock market and make your investing journey smoother. It's in simple language, with key points to understand better. So, buckle up and get ready for some financial knowledge bombs.

Key Takeaways

1. Macro events influence the stock market volatility and interest rates play a crucial role.
2. The Labor market and its stages play a significant role in analyzing market trends.
3. We will discuss five trending stocks.

Understanding Current Stock Market Volatility

Why is there so much fluctuation in the stock market?

Well, the answer lies in the labor market's strength. A strong labor market signifies low unemployment rates, which implies increased demand for goods and services. However, if the supply can't keep up with the demand, inflation occurs, leading to price hike.

Government policies also play a role here. If the inflation remains high, governments are less likely to cut the interest rates, affecting the stock market. However, it's a subjective matter. Some economists believe that the inflation dilemma isn't so severe presently.

The Labor Cycle

• Weak Job Market: Recognized by an increasing unemployment rate, this stage occurred towards the end of 2020 and in the middle of 2021.
• Strengthening Job Market: As the name suggests, this stage experiences a strengthening job market, and that's where we stand now.
• Peaking Job Market: This is the stage of maximum job strength; many assumed that we are currently in this stage. But, this is where the disagreement lies. This affects the interest rates and market performance.
• Peaking Inflation: If the job market peaks, the inflation is also assumed to peak. The key determinant is the balance between supply and demand. If supply and demand mismatch, then only inflation will increase.
• Interest Rates Changing: If the employment cycle peaks, the interest rates will either rise or remain stagnant, as they won't be cut. This occurs when the supply equals demand.
• Weak Job Market: When companies can't produce more, they create a weak job market by firing more people, bringing us back to stage one.

Discussing Trending Stocks

Next up is the exciting part, trending stocks!

PVR-INOX

First, a brief context - Earlier this year, a merger between cinema giants PVR and INOX took place. It turned out to be beneficial for both companies. The key strength of PVR INOX lies in its footfall increase, and blockbuster movies returning to the cinema. However, the main risk lies in boycotts and an increase in online movie consumption through OTT platforms.

Pi Industries

Pi Industries is expanding from agri-chemical to the pharma space. A critical point for PI is that it already has expertise in complex chemical space and has shown consistency in managing cash flows and profits. However, the uncertainties of entering and performing in the pharma space are still a challenge.

Suzlon Energy

Suzlon's growth strategy has been focused on establishing windmills for generating electricity. But, the adoption of wind energy has not kept pace with solar, which is the growing trend of renewable energy. It's a gamble, but the company has started to pick up from its lows, offering the potential for high returns.

Den Networks

Den Networks is gaining momentum ever since Geo platforms, a Reliance Group company, acquired a significant stake in the company. Its main operations revolve around cable and internet services. The company seems to be destined for growth as its business is synergistic with Geo and other reliance group companies.

Conclusion

Understanding the stock market's unpredictability and keeping a tab on trending stocks, equips one with valuable insights and aids in decision-making. Though the pros and cons are part of investing, the goal is to take calculated risks and make informed decisions.

Learning Framework

1. Stay updated on global events as they impact the market.
2. Keep an eye on interest rates and government policies.
3. Continuously monitor the Labor market cycle.
4. Use company insights to choose wise investments, understanding their risks, and anticipated returns.