Saturday, July 13, 2024

Stock Market | Markets may be bullish, but invest cautiously leader


Anil Patil, Promoter, S. P. Wealth, Kolhapur

Today, the stock market is reaching new bullish highs. What should be done at such a time, this question is forming in the mind of every investor. An article that sheds light on this question.

Currently the Indian stock market has crossed the mark of 750038 and established a new high. Sensex's journey started in 1980 with the 100 mark. Today it has crossed the 75000 mark. Sensex in the country has initially invested Rs.1,00,000/- in the year 1980. Today it has become Rs.7,50,00,000/-. This means, Sensex has returned 16.24% in the last 44 years. How many people have benefited from this sector, firstly 4 to 5% people seem to have benefited by investing in this sector. (Stock Market)

Looking at this sector for the long term should be first; But many people invest for short term and end up losing. Then they ignore this area. Today, for the first time out of a population of 144 crores, the milestone of 14 crore demat accounts has been reached by the end of March 24. 7% of the total population has now landed in this sector to benefit. Every year Sensex is setting new highs. Various indices in the market have set new highs this year as compared to the previous year. The change from the previous year and the returns given are shown below.

Elections are being held in many countries including America this year. That means 60% of the world's people are facing elections. It is not known which party government will come in which country. Therefore, the period of elections creates instability in the market due to change in the management of the country.

There are elections in our country next month, and assuming that Modi government will come, the stock market has reached a new high. If there are any changes, however, the volatility will be felt in a big way. The stock market has given tremendous returns in the past years. The reasons for this are as follows.

1) Participation of foreign investors has increased, FIIs have invested 1,75,000/- crores in the last financial year.

2) Last year there were total 11 crore demat accounts as on March 23. At present these numbers have increased to 14.60 crores. Three and a half crore new demat accounts have been opened in the last year. The participation of common people in our capital market is seen to increase with great vigor. 40 lakh people have opened demat accounts in December 2023. With 30 to 42 lakh new accounts every month, new middle class investors are entering the capital markets.

3) 19270 thousand crores have been invested from 8.39 crore accounts in March 2024 through Systematic Investment Plan, a regular investment method every month through mutual funds. This is a new high till date. In the last year, roughly 16 to 18000 crores have been invested every month from mutual funds through Systematic Investment Plan SIP. Due to the large amount of investment in the capital market in many ways, the stock market of our country is witnessing a great boom.

4) NPS (National Pension Scheme) is getting popular in our country, huge amount is being invested in National Pension Scheme every month by common people and employees. Part of the money accumulated under the National Pension Scheme is invested in the equity market. Huge amount of money is being invested in equity market from this place.

5) The money collected by selling ULIP policy from the life insurance company is invested in the equity market of our country. A large amount of investment is seen from this place.

The stock market is reaching new highs every year due to the increase in investment in the equity market in many ways as above.

Markets have a bullish and bearish nature. There are booms and then busts and then booms. Now it is not possible to say how long this boom will last. The market trend will be known on the outcome of the election. Now the bullishness is going on, as the market goes up, the profit should be put into the layer i.e. rebalancing your portfolio. But looking at the other side of the market, it cannot be said that the market is too expensive now. By looking at the PE line of the market rather than looking at the market figures, one can know whether the market is cheap or expensive.

Currently the PE ratio of Sensex is 25.68. PE ratio of Nifty Midcap is 34. Small cap PE line is showing as 27. The PE ratio of Bank Nifty is 16.5. It seems that there is still scope for investment in the banking sector. This means, the mid cap small cap sector looks more expensive than the market large cap. If there has been a very good return on investment at that location, some profit should be withdrawn. Care should be taken while making new investments. When making a new investment based on past returns, one should invest little by little rather than making a sudden investment because investing when the market is at a high level may result in lower returns in the future. Keeping this in mind, investments should be made cautiously. Even if the market falls for a short time, it can be very profitable in the long run.

There may be more boom

The era of covid is over. The Russia-Ukraine war began. The result of both of these things was that inflation increased and each nation raised interest rates to combat this inflation. As a result, the entire Europe and other countries were hit by recession. Now there is a possibility that the interest rate will decrease in the coming period. If that happens in the coming year, the flow of investment in the markets of other countries increases. While the market may still rise and other countries reduce interest rates, investors in those countries prefer India as a safe investment. As a result, if the inflow of foreign investment increases further, a further boom is likely. (Stock Market)

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