There is a sense of unrest, a feeling of disquiet. The millions of new retail investors who believe that the stock market is a money printing machine, where making money is as easy as making Maggi, this ongoing fall of the markets for the past few days has created a lot of anxiety. Not able to understand why the markets are falling and finding it even more difficult to fathom when it will become ‘normal’ again, they are now waiting in the sidelines, looking for some direction. New IPO listings is what they are looking forward to; the jaw-dropping successful listing of Clean Science and GR Infraprojects has made the primary market more attractive than the secondary market. More than the indices, all eyes are now on Zomato listing, expected around 27th of July.
So, why are the secondary markets falling consistently while early earning reports look good? Apart from speculative forces pushing the markets down for their own vested interests, the reason being cited is – rising corona cases globally has weakened the sentiments, bringing back the fear factor. But in India, currently, aren’t we having a much better patch than before?
The Delta variant spreading infection in the US sparked off a broad sell-off on Wall Street due to growing fears of another shutdown threatening the economic recovery. The Indian markets followed the US markets which were all down sharply.
Frankly speaking, this is just a reason “found” to justify the sell-off by various punters. With many stocks having hit new highs, there is lots of profit booking, with many questioning the valuations. Where were these when a few days ago, some were saying that the market will hit 50,000 or some even saying 1 lakh? Rakesh Jhunjhunwala sold some shares held by him in Titan, Tata Motors and Edelweiss over the past five days. It’s not because he is losing faith in the stocks he is holding; its merely because he is a market investor and is making some smart money at current valuations. Thus its punters like him and many more, who are booking profits on their investments and there is most certainly nothing wrong in that. Many are reading 2+2 =22, saying that even Jhunjhunwala is selling off! Well, as we said, all have their oars in the water and each has their own reasoning.
And markets going just one way – either only northwards or only southwards, both are bad. These intermittent corrections are actually a healthy sign and a good opportunity to take new positions.
Many are saying that FIIs selling continuously is also a sign. Well, they are not selling lock-stock-and-barrel. Till date, for July, they have sold equity worth Rs.5000 crore and we take into account their investment in debt, the net sale made by them works out to less than Rs.1300 crore. Is that a reason to worry? They sold equity but invested in debt – what does that say?
As we say time and again, there will be reasons and more reasons to justify any rise or fall but as long as there is no major calamity (apart from the ongoing pandemic), the overall markets will remain good.
Bottomline – unlike what the doomsdayer’s are saying, there is no major correction on the anvil, there is no resounding crash round-the-corner. Stay invested and keep the faith in your conviction alive.