The Indian Stock Market - Some Thoughts
If we observe and analyze the past events which dramatically influence the behavior of the Indian stock markets, one thing is crystal clear. The Indian stock markets have matured well enough to withstand the shocks and surprises of the short-term. And the short-term is the phase of any share market which is prone to volatility of an unusual character. The short-term situation is always guided by the overall micro situation and overlooks valuations of the shares of any company. It has been observed that the market moves may be irrational in the short-term which are purely guided by selling pressures or buying moves. If one considers the situation with a long-term perspective, the truth lies in the fact that the long-term price movements of a stock or share are triggered by earnings of a company.
Indian Stock Markets Mature - Are the Indian Investor?
As has been pointed out earlier that the Indian stock markets have grown mature by successfully coping with the situations of boom or bust. But have the market participants and investors have grown that mature? The kind of hurried buying and panic selling that is witnessed on a given day on any particular bad or goods news does not speak well of the maturity of our investors.
Extreme Confidence on the Future and The Indian Stock Markets
If a study is conducted of the situations where the share prices crashed or went bust, one would surely find the correlation between extreme confidence reposed in the future and the resultant crash in prices. It is worth noting that in a high liquidity environment the investors tend to disregard the true valuations and join the bandwagon in the hope of making a quick killing. At times such expectations met with success but in most of the cases the investors rue their short-sighted decisions and face a scenario when their valuable resources are locked up for a considerable period of time with no immediate exit route being available. Thus It is always desirable to have a sound grasp of the fundamentals that govern any share market.
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