When Does The Stock Markets Fall?

NSE – National Stock Exchange of India Ltd –  Has gone from 8,083.80 on 03-Apr-2020 (Covid Era) to 23,851.35 today (26-Jun-24):

What’s the increase?

It is an increase of 195.05%. All this in just four years.

In the last year from June 23 to Jun 24, it has given a return of 27.63%.

An experienced investor will understand that this will NOT sustain.

In the future two things may happen to the Indian Stock Markets.

• It may fall by a minimum 5% to max 10%, or
• It will be range-bound for another 12 months.

From where the money is coming?

It is the Mutual Funds.

The assets managed by domestic mutual funds (MFs) rose by 34 per cent during 2023-24 (FY24) — the most since 2016-17 — propelled by a sharp rally in the equity market and robust inflows.

For the three months ended March 2024 (Q4FY24), the average assets under management (AUM) stood at Rs 54.1 trillion compared to Rs 40.5 trillion in Q4 of 2022-23 (FY23), according to data from the Association of Mutual Funds in India.

Source: https://www.business-standard.com/markets/news/domestic-mutual-fund-assets-jump-34-in-fy24-the-most-in-seven-years-124040400938_1.html

So nothing looks suspicious now, but these kinds of returns cannot be sustained for long.

Why the stock markets can get stagnate or fall?

Most of this influx is from short-term investors. Once they start booking profits the markets will fall.

Or they will stop their SIP investments, and then the markets will get stagnant.

You see for the markets to keep rising money has to keep coming. But we need money to live a life right? One day or the other in the near term that day will come when we will see a fall or an elongated and very boring stagnancy in the markets.

When the markets start falling the non-directional options traders have nothing to lose. But most of the directional trades especially those who will be long in the markets will suffer.

You can do my conservative option course and learn non-directional option strategies and make approx 3% a month.

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