A fable of elephants and horses that bulls and bears of India’s stock market don’t want told aloud

Subscribe to enjoy similar stories.Imagine a marketplace for domesticated animals. Over the decades, two dominant merchant groups have come to rule it. Call them X, those who grew up with these animals and understand their temperament and seasonal moods, and Y, a group of shrewd outsiders who spotted the market’s potential early, brought capital from distant lands and learnt the trade well enough to profit off it.

Both have accumulated what the market prizes most: elephants and horses.Elephants have dominated the profit pool league. The finest among them, the tuskers, fetched premiums that other animals could only dream of. Owning these meant owning the market itself.

Horses were the other great bet—faster but more volatile. And horses occasionally did something extraordinary: when the price offered insulted their dignity, they bought themselves back off the market. Proud animals, these.Both X and Y hold heavy positions in both.

Then came the cheetahs—a new breed on the race tracks where horses ran. They’re bred to be faster, light on capital and manpower, and raring to outpace the rest. The elephant’s territory of bulge banking, legacy consumption, etc, began to witness other animals finding paths to the same profit pools.

Even the fancied tuskers began to sweat. Their premiums gradually eased as their growth rates began to slow. In mercantile mathematics, an ebbing premium on an oversized position is not stability.

It is a slow bleed with good optics.These trends led both X and Y to the same conclusion: over time, we need to lighten up on elephants. Perhaps on horses too. They didn’t announce this, of course, since such decisions must be kept discreet.