"When a barber offers you stock advice, then remember the markets are overvalued." ~ Vijay Kedia
And guess what happened this picture was something that was trending in the market circles indicating that what may most likely happen.
But the point to be noted is that the idea of getting more money or returns from the market has increased to a large extend in such a way that there has been a very large jump in the retailer participation in the market. The retailer participation in the market was so intense that even the FIIs who actually helped gain momentum in the market even had to return or put back their investment in order to be part of the bull run.
Where does the problem lie?
Let us look in detail about the type of retailer participation we are seeing in the market:
All the new traders here have very less knowledge of how or what the actual function of the market is. We can easily see this in the performance of certain stocks say for example TATA motors even with bad numbers and with the JLR issue not solved back then the stock sored from Rs60 to Rs323 last year why is that? Because credit can be given to the retailers, because as a newbie in the market most Indians have a certain level of emotional sentiments towards the TATA stocks they know about the company even though they don't know how to analyze the stock, this is the reason behind it. .
As of now most of these people have only seen returns in the market as the market is going in an unending bull rally and has only contracted about 5% since the beginning of the rally. With such a small downtrend. This can create a wrong concept on the investor side that the market is a gold mine that is yet to be discovered. On seeing a proper correction it is highly doubtful that how the new traders are going to react.
With that being said we need to wait and watch what really the market is up to.
Extra read:Warren Buffett’s favourite share market gauge says India stocks overvalued; cross 2008 levels
Social Plugin