Introduction:
In this year alone Nifty 50 has increased by 12.70% [on year-to-date basis]. There were various factors which led this bull run like the election results, returning of FIIs, etc. Mainly the concept of China plus 1 strategy also made foreign companies to invest in India. Even those Indian start-ups catering mainly in foreign countries, are encouraged to come and establish their business in India. This could lead to economic development in the country.
The come back of FIIs in July is also a reason that pushed the market to this high.
From all the above facts we can tell that, in a long run there is a possibility for the country to become 3rd largest economy in the world.
When it comes to the stock markets most of the stocks have given a nice bull run. This includes even those whose fundamentals are weak yet gained fancy valuation.
Will the markets correct now?
Now the doubt that most people have is,when will the market correct. After every bull run usually there would be a correction in the markets. Even the Nifty is at an over bought zone as the RSI is high. But even then the is no sign for any big correction [like 10%,etc] to happen in the market.
The main reason must be due to heavy inflows into mutual funds. It is said that a huge sum of around 21,000 cr Rs is left with such AMCs [each] every month! So, with such a high inflows they are unable to find proper investment option to park those funds.
So even during a small correction, these DIIs heavily start to buy fundamentally strong stocks which makes quicker recovery of those stocks.
On the other hand, a news report states that a sum of around Rs 15,000 cr have come from FPIs just in the first two weeks of July.
The usual trend which is seen in the past is, investors book their profits before the budget and start to buy after the budget. Now we should wait and see whether this will happen this time also. In India the budget session is purposed to be held during 23rd of July.
Triggering common retail investors to panic sell:
Another point which the markets should be cautious about is, since these institutional investors [mainly foreign institutional investors] have very huge sums invested into the market they may try to move the market by creating a fear in minds of ordinary retail investors and tempt them to panic sell their holdings. This allows them [institutional investors] to buy stocks at very cheap price. However there is only a possibility for this and I am not attacking any particular institutional investor, further such things have happened in the past.
Conclusion:
But however we donot expect any major corrections in the market due to strong SIP inflows from common retail investors into AMCs [mutual funds]. But yet being cautious is necessary at this moment.
However there can be a mild correction [like 5%,6%] due to profit booking that may happen this week.
But it is safer for investors to invest during the period of consolidation of Nifty [ I.e., side way movement of Nifty] and the cues also must be positive. But anyways buying on dips the most best way to invest in stock markets, but since we cannot time the market we say the time of consolidation period plus positive cues is also safer to invest.
However always consult a SEBI registered advisor before investing in any stocks.
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