Is the bear market over? Are we in a bear market? These are questions that I have to face in every classroom that I enter….so here is my reply.
Frankly, I do not know. But surely the index is a far cry from 21000 index that we had seen earlier this year. Is this the first time that we are going through a bear market in India?
The answer is a mixed one.
It is a no if you consider that 1993, 1997, 2001-2, etc. HOWEVER, there is a big difference. This is the first time when there is a HUGE sales force getting people to invest in equities. Business channels, Business magazines, Newspapers are all espousing the cause of investing during tough times – and SIP is the greatest invention by mankind since sliced bread.
Almost all mutual fund houses are running SIP “schemes” – hdfc, templeton, are also doing their bit! The number of ‘SIP’ sales is increasing at a brisk pace. In fact Mirae (fund house) sells a lot of SIPs internationally.
Banks are opening branches and recruiting relationship managers, branch managers, personal bankers, etc. This is surely increasing the number of people coming into the equity markets.
Maybe all this money will hold up the market – and absorb all the sales done by the FIIs. Maybe inflation will reach 13% and thus many people will realise the futility of investing in RBI bonds and PPF.
On the other hand in case you start seeing articles saying “Did you know Mr. Mehta has got negative return in fund xyz by doing an SIP for 3 years”. This will scare people off the markets – and they will stay away for long.
There is also a big bunch of high commissioned guys (more gals) selling unit linked insurance. This market is BOOMING. So if sales of unit linked plans, mutual funds, PMS, etc. are happening at a brisk pace, and the clients are not watching carefully, the market may not go down further. However, this sounds funny. We hope all the king’s men and all the King’s horses will be able to keep Humpty Dumpty together.
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