Wednesday, March 15, 2017

DOMESTIC RETAIL INVESTORS: TIME TO SALUTE YOURSELF



This has to be said. Indian retail investors over last many years has been at the receiving end of many jokes. Always buying at the top, selling at bottom, “Dumb money” and what not. But the last 6 months have been remarkably different. It’s time the domestic equity investors put their head high and say “We are the smart money”

Picture this, FIIs sold stocks worth over Rs 40,000 cr post demonetization and when during the initial part of this process the Nifty fell from 8500 to 7900, a bear market loomed large. However, the domestic investors said nothing doing and they started to buy. Dollar to dollar FII selling was matched by DII buying and I am not even counting the direct retail buying.

And now, yesterday FIIs bought 4,000 crores at the highest level of Indian markets. Now this is not to say, FIIs have been foolish. They have a choice of investing in various markets and there are many markets which far outpaced Indian markets so they focused their energy elsewhere. But while in the past, retail would throw in the towel at huge FII selling, this time they kept buying treating this as a flash discount sale and boy are they reaping rewards now?

Make no mistake, market is set to go through a frenzy now but this is the time to sit back and enjoy while FIIs scramble to buy at all-time highs. At some point, this market will become euphoric and fall under its own weight but trust me that time is long long way off right now.

Picture this, over last 2 years when the Nifty has made a move from 9100 to 7000 and back to 9100, the midcap index has surged 24%. So retail has made huge money in individual midcaps. And a rising tide will lift all boats, so the portfolios are set to surge higher even from here.

What if you missed this rally? No problem – wait for dips and consolidations, they will inevitably come but when they do, have to participate. There is no fun in watching someone else make all the money.

Disclaimer: The author of this article does not invest/trade in stock markets including derivatives. His only exposure to stock markets is via the stock options given to him by his employers as part of his compensation


5 comments:

  1. Grt... Indian equity market's dynamics have completely changed

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  2. Sir,
    Your analysis is as good as it can get.I am a big fan of your views on markets.Thanks for always sharing your views candidly with the audience.

    ReplyDelete
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  4. But shouldn't buy completely as correction is due. No one knows when it will come and at that time rather than force selling, should have cash to buy. Already midcaps have run ahead of valuation. Agree that it may run up even more, possible but gaining less is better than loosing more

    ReplyDelete