Time for Caution in Indian Stock Market

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 Indian Stock Market

Time for Caution?

The BSE 30 Index is at an all time high and hovering around 60k. Lot of confusion is there in the market as to whether it is at the peak or still some room is left for the market to move up.  It's a million dollar question to answer because despite the stretched valuations, the market is going higher and higher every week. Still there are many reasons to believe that our market is not going to crash in the near term.  The sustained high commodity prices are supporting the manufacturing sector tremendously and increased cash flow owing to better price realization paving the way for them to reduce their debts resulting in improvement in their balance sheets. Speedy digitalization and implementation of technology driven tools in each and every segment has been extensively supporting the IT sector.  Further, there is still enough liquidity in the system to support the market as central banks of major economies are in no hurry to taper the liquidity soon and interest rates are likely to remain subdued in the near term.  In addition to this, our government has been putting in all efforts like higher infra spending, liquidity infusion in the banking system and introducing aggressive PLI ( Production linked incentives ) for various industries. All seems exciting so is the market behaving accordingly.

However, the thumb rule of investing is that one must be fearful when everything goes right and vice-versa. So despite exciting micros and favourable macros, we should keep fear in mind and start reverse SIP in the market.  Reverse SIP means putting money out of the table in a staggered manner. Utilizes that liquidity to either retire some debts or invest in Gold, FD and real estate. This will not only rebalance your portfolio but protect the capital as well.

The long term story of the Indian Economy is to remain intact but since we have run up too fast in recent times, the market needs some consolidation at these levels.  Let the market cool down and find its level. In the meanwhile, have some leisure trip my dear friends, buy some outhouse for weekend spending with friends and family and of course don't forget to buy some jewellery for your better half.



-Rajendra Jhanwar        




     

Comments

  1. UnknownSeptember 19, 2021 at 6:16 AM

    you predication may be right or wrong but its correct in terms of price and in past whenever market move its only on flow of liquidity not on economic development .

    ReplyDelete

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