Recession in stock market a natural process & investors should not panic

The boom that has been going on in the Indian stock markets for the last seven weeks has finally stopped once again. The pressure in the market increased due to the rising figures of Corona and the international fear arising from it. In a single day, the stock market took a dive of about 1,000 points, defusing the notion of a long bullish trend. Experts are reconsidering their opinion regarding bullishness in the market based on their data, but I clearly believe that bullishness and recession are natural processes, and investors should not panic, nor should one take any decision under stress.

Even on technical grounds, some improvement in market is being considered, which once again indicates that 2024 will prove a good year for stock market, provided the market continues to get the protection of government policies.

Among those who left this market as soon as the bullish environment changed, name of foreign institutional investors, i.e., FIIs, is on top. FIIs, who were buying in Indian markets, started selling again last week and sold shares worth Rs 9093.99 crore, while domestic institutional investors, i.e., DIIs, responded to selling by FIIs by buying shares worth Rs 12276.19 crore.

There was a declining trend in the week ending December 22, and biggest reason is the fear of Corona spreading again and the all-around increase in prices due to FIIs selling and excessive buying in the market.

But, certainly, only DII is not needed to respond to FII sales, because Indian investors are still the basis of the rise of the Indian stock market, whose crores of rupees are invested in the market every month through Systematic Investment Plans i.e. SIPs. Thus it is clear that there is bullishness ahead in the market, even if the pace slows down for some time. Technical experts are also expecting a further rise in the market but, it is also estimated that if there is a slight decline in the market then it will widen the base of new rise.

According to the data, last week there was a decline of 376.79 points in BSE index and BSE index slipped from 71483.75 points to close at 71106.96 points, while NSE index declined by 107.25 points and NSE Nifty index declined from 21456.65 points to 21349.40. Similarly, there was a slight decline in midcap and smallcap indices. Another special thing was that BSE and NSE index again broke their highest levels and also reached new records.

Traders say that there is an improving trend in the market, which will continue with some ups and downs. This week, there is also the monthly cut of the futures market on December 28, and so there are fewer chances of any particular bullishness. At present, traders should invest in IDFC, IDFC First Bank, Iberialest, HFCL, Jain Irrigation, SW Solar, Chambal Fertilizers etc. There is an improving trend in the shares of selected companies, but even considered good shares may fall.

This week, the IPO of Innova Captab Limited will be available on the main board, while on the SME platform, IPOs of six companies including Jaipur’s AIK Pipes and Polymers will be available. Among the new IPO applications coming to SEBI this week, three companies have presented their new draft herring prospectus-DRHP.

(This is the personal opinion of the author. The author, his family members and acquaintances may have investments in the companies mentioned in the article.)

Vimal Kothari Associate Editor, First India News & Senior Journalist