market movements and investors

Vijay Prakash Srivastava

There are two types of speculations being made about the Indian stock market at this time. One is that the current growth is not going to last and secondly that the market will rise further and touch new heights. Those looking at the latter possibility are comparatively more. The stock market of the country is constantly touching new heights. If anyone compares today’s prices of shares with the prices of a month ago, then it is natural to be surprised. Now many people must be regretting that why they stayed away from the stock market till now.

The second category of regrets are those who have been investing in stocks but who did not make new purchases in this period of market rise thinking that the shares have become expensive and after buying, the prices will fall somewhere. Do not go. The opposite of what they were thinking happened. People were hesitant to buy a share of five hundred rupees, the same went out of more than a thousand rupees. The BSE index is now above sixty thousand, which had come down to twenty six thousand at the time of complete ban. In that era, the kind of profit that would have been made to those who had bought in selected stocks by taking risk, it can be easily guessed.

It was certain that as the Corona crisis subsides and normalcy returns, its effect will be visible on the stock market as well. But no one expected that such a boom could happen in the market. Therefore, now such apprehensions are also being expressed as to how long this boom will last. Is there going to be a huge downturn in the market now? It is not that the market has not seen days of decline here. At times when the decline started, it dominated for several days and analysts felt that the market was now going into a downtrend. But after two or four days the momentum came back and the market started touching the heights again.

It is natural to ask the question that why is there such a bullish trend in the stock market? One answer lies in the fact that the Corona figures are coming down, markets have opened up and industrial activities are returning to the old level. Related to this is also the fact that a large population of the country has been vaccinated against corona. Then there is good news on the economy front as well. Unemployment figures have come down. Global rating agency Moody’s has announced that India’s sovereign rating has been changed from negative to stable and expects India’s GDP growth to average around 6 per cent in the medium term. These signs may be favorable for the country and its economy, but not so much that in a few weeks the price of shares of some companies may go from two hundred to four hundred or two thousand to four thousand. There are two types of speculations being made about the Indian stock market at this time. One is that the current growth is not going to last and secondly that the market will rise further and touch new heights. Those looking at the latter possibility are comparatively more.

There are possibilities of investing in the stock market from different perspectives. Just like people deal in shares for a short time, meaning they do not hold the shares for a long time. There is also a class of people who buy and sell shares within the same day. Whereas in the long term approach, shares are bought for a longer period which can be more than a decade. For how long one invests, it depends on his/her choice and strategy. But it is considered necessary to keep in mind the risks associated with it while investing for any stock or time period. There are daily fluctuations in the market. One class tries to make profit among them, then the other class does not care about these changes because the hopes of this class are fixed on the future.

The word risk comes up frequently in the language of investing. The risk also tends to be low or high for different asset classes. The asset classes include real estate, gold and silver, fixed deposits, mutual funds, shares, etc. When comparing different asset classes, the highest risk is associated with investing in stocks, but the highest profit potential is also seen in the stock market. Many stock market experts are saying that after a time the index will touch the lakh mark. To those who doubt it, he reminds them that the index used to be on the thousand and where it is today.

It is difficult to say anything with certainty about the future performance of the stock market. Technical analysis of the market can definitely help in this, but it cannot be said that the prediction made on the basis of these analysis will always prove to be accurate. Therefore, the stock market is not for those who do not want to take risks. Those who want to enter the stock market after seeing the rising movement, they need to understand the market trend. There is no dearth of information to develop this understanding. There are financial newspapers and magazines, there are economic news channels, there are other sources too. Yes, but the information should be gathered from authentic sources only.

Even if you are capable of making a big investment, invest little by little. Prefer investing in companies that have been in the market for a long time and have consistent demand for their products or services. If there is a slight fall in the price of the stock in which you have invested or even if the price increases, then do not start thinking of exiting it. Such changes will continue to happen on a daily basis. Give your investment some time. Shares are not only expected to increase their value. Most of the profit making companies also pay dividend on their shares. There are many companies whose dividend payable is more than the interest earned on savings or fixed deposits in banks at present and many of these are government companies. On one hand there are shares whose price is much more than their reasonable price, on the other hand there are such shares which are getting less than their fair price. Obviously new investors should start with the latter.

When the market falls, so does it. There was a huge fall in the market in 2008 and also in 2020. But the market recovered from both the downsides and recovered well. The performance of the entire stock market is linked to the performance of the economy. No miraculous changes are expected in the Indian economy in the near future, hence the guesswork and it is only a guess that if the market does not rise a lot, it will not fall much either. A decline opportunity is considered perfect for buying. Hence all investors, new or old, can use the fall to build or expand their stock group. This buying should be done looking at the company and not just looking at the rising index.