Indian equity markets have had a one way rise ever since the exit polls announced the formation of a Modi led Govt. on 12th May 2014. Many investors who were sitting on the side-lines to take a plunge have a feeling of 'having missed the bus'. There is a general consensus amongst analysts that we have entered a secular, multi-year bull run. Retail investors are getting restless day by day as they have hardly been afforded an opportunity to enter the markets a lower levels. The markets have a tendency to test the patience of the investors: whether they are in a bearish mode or bullish mode.
You would recall that during the bearish phase from 2008-2013 markets gave ample opportunities to investors to book profits during intermediate bouts of recovery. Similarly, in the current bull phase also markets are likely to provide attractive opportunities for entry by offering decent correction from the recent highs (from 26000 levels on Sensex and 7800 levels on Nifty). The broader markets seem fully priced at the current levels and are showing signs of fatigue. Whenever a correction happens it is going to be a reasonable correction of at least 10% from current levels (The mid and small cap stocks could react more on the downside). Retail investors are advised to be patient and await an opportunity to enter the markets on decline.
The result season so far has been satisfactory, but the companies declaring results in the month of August could surprise on the negative side, as the investment cycle has still not reversed. The markets have so far ignored the negative factors: Delayed monsoon (El Nino effect) and the Global tensions (from Gaza to Ukraine to Iraq). If the things do not improve from hereon, we could be in for a prolonged period of high inflation and higher interest rates, ultimately leading to earning down-grades. But there is no denial of the fact that we are in a strong bull market and every reasonable dip in the markets is a buying opportunity for long term. Retail investors who are afraid of timing the market are well advised to invest in the markets through Mutual Fund SIPs.
