Signals from the market

The narrower stock-market indices may stay disconnected from prospects of the Indian economy

The stock market is widely believed to be a forward-looking indicator of the economy. While one may struggle to find an individual who has perfect foresight, the market, some believe, is a “neural network” of many individuals who through their collective buying and selling of stocks, end up reflecting economic trends months, and at times years before they happen. This learning machine, people assume, can be smarter than the individuals participating in it.

This is a tempting proposition, and for those of us who have spent a long time in the markets, several examples come to mind of stock prices moving