Mr. Lotus,
Sorry sir, I do not agree with you. Can you enlighten me the on the
growth in the fundamentals that pushed the sensex from 15 K to 20 K
within a short period of one month ?
Assume the face value of a share as Rs.10. It is now being quoted or
traded at Rs.800. Even if you get 100 % dividend, the amount is Rs.10,
a return of 1.25% on your investment. You buy it with the gambling instinct
that the market price will go up.
There are times when the prices have crashed and many investors have lost
everything.
The Finance Minister weeps if the sensex falls , but he is not worried when
it is artificially boosted. When the foreign investors withdraw their
investment, what would happen to sensex ?. The rupee also will fall
with all its attendant consequences.
Sri Ranganathan,
I agree with your observations about the current bull run.
However having called the indulgence in trading as gambling, you shouldnt be worried about fundamentals, isnt it ?
That was said in a lighter vein, i am not alluding to anything else.
Theoretically, the way stock market behaves is 'supposed' to be a reflection of the mood of the economy or better still a confirmation of the fundamentals. The stock price which is a multiple of the EPS is forward-looking isnt it ?
I neednt tell you that when we invest in a stock it is not only about the dividend income but we also look for capital appreciation else the model wouldnt justify the investment.
There is lot of unscruplousness and unholy collusion but i still would stick my neck out and say that our market is still one of the better managed among the lot.
My general suggestion to anyone wanting to throw his hat in the ring is this :
a. The best advice on investment you will ever get is from the mirror, i.e yourselves.
b. Each person knows his/her investment and risk appetite.
c. Each person should set the disciplines that they like to follow
If the game is played strictly in accordance to the rules that we set for ourselves, we can still walkout with head held high. If you want to indulge in trading, dont befriend Greed.
Now coming to your part about PC being weeping whenever Sensex falls, it is because, normally the index trips on his sound byte or his policy note. Whether fairly or otherwise, the performance of the FM is linked to the bourse. Till the market delinks itself from the signals of the ministry and focusses, as you rightly said, on the fundamentals, FM will always be wary of the index.
About the FIIs pulling out, it is possible but not probable given the fact that the we are one of the markets generating the highest returns.