How to invest as the share market witnesses rapid fluctuation?
The rise and fall of the Sensex are no longer as surprising as they used to be. Even a 500-day fluctuation in one day is not big news for the market right now. However, investors know for sure that a fall is inevitable if you go higher. It is on this basis that the market is divided. One group hopes the index will rise further. And the other team is beating the rhythm in the exact opposite direction. Everyone has their own argument. Who is thinking it, and what are you predicting by measuring it, the analyst has highlighted all the aspects in this article. Nilanjan De
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A.The rise of 500 points in a few days has become a watershed for the Sensex lately, this is not big news for the market. In fact, a number of factors are responsible for the growth that the stock market has shown in the recent past. Investors are well aware of those factors. Of course, they also know that falling is inevitable if you go higher – but no one knows exactly when that fall will come. Quite naturally, there are two opposing investors in the market at the moment. The first group thinks that the index will increase further, the second group thinks the opposite again. We’ve talked to a lot of people about these two doctrines. Fund managers, wealth advisors, and, of course, investors – all have their reasons. This is our report today. We have divided the main issue into ‘for’ and ‘against’.
In a word, liquidity – that is, a huge amount of money is coming into the market, that huge amount of money is being invested in many types of stocks and prices are rising. After all, foreign sources, domestic investors are also responsible for the ‘inflow’ of this money. A large part is due to the old fixed deposit breaking or closing. Traditional investment in deposits is no longer considered relevant, and it is already clear that low-interest general investors are no longer enthusiastic.
Therefore, the share of deposits has decreased and there is more allocation in equity. New investments are reaching the stock market either directly or through equity funds. Yes, not all types of macroeconomic factors are accelerating this growth rate, but it is not having much of an impact on the stock market. On the contrary, the market is optimistic that many IPOs (and NFOs) will come in the future. Therefore, many people are feeling confident about the supply of new money. Incidentally, the list of IPOs published by market regulator SEBI is quite long and wide. There are many small issues out there, there are also life insurance corporations – an issue that has already been voiced by many in the market.
Some investors believe that even if there is a temporary deviation, the market will continue to move upwards. We can’t speculate about when the index will move further north beyond 70,000, but the possibilities cannot be ruled out.
Whatever the possibility, the opposite must be taken seriously. The reason is that more than one big factor is working against the market, their combined strength cannot be blown away. First of all, let’s talk about the macro factors that have been mentioned before. The economy is not growing much, and the production index is down. If growth does not go well, many hopes will be dashed in such a large country (despite the increase in demand).
However, the thing that is working strongly against the market is that there is a strong pressure of inflation. The impact of rising commodity prices will hurt many industries. Remember that the price of mineral oil and other commodities is rising so much that many ordinary people have been cornered. Prices of medicines, medical services, health insurance premiums, various fuels, and above all food items have gone up. The Reserve Bank has indicated that it is not raising interest rates now – but it is not clear what will happen tomorrow.
One more thing. In the US, interest rates will rise soon, the country’s bank regulator, the Federal Reserve, has indicated. As a result, a lot of money will naturally go out of the country’s market like India and go to America. This is a very serious matter for us. It is better to say that it is not possible to say anything about it in a specific way right now. Chances are, that’s all there is to it. It should also be noted that the Chinese market has been experiencing unintended events lately, but it is difficult to do so again.
So if a small comparative list could be made quickly, the figure would look like this:
Not to mention the interest rate. According to many, the Reserve Bank is doing well without raising interest rates. Interest-bearing costs in the corporate sector will increase if rates increase. At the moment, banks are willing to pay more for various sectors – we have already seen the positive role of the government in telecom and so on. It is also worth noting that some progress has been made with the corona vaccine. The government also seems to be trying to bring in some policy ‘reforms’. Examples include the establishment of the Bad Bank and the National Asset Monetization Plan.
Can be brought.
The potential for Indian institutional investment in the future is huge. Insurance and mutual fund companies are getting huge investments, and a huge chunk of this money will enter the stock market, presumably. Liquidity may not fluctuate that much, and this idea will strengthen the Indian market. That must be reflected in the index. Just waiting for the time.