We are staring at a bull market like never before. Nobody is complaining but with each passing day, two things are going higher – number of stocks at a 52-week high and number of naysayers in the market who are telling us the market should come down.
This is a typical phenomenon of the bull market and every bull market has gone through these phases of disbelief. This time thanks to social media and lot of channels and everything, there are a lot more noises and the structure of the market has fundamentally changed. That change is creating a greater scepticism. This change is about the retail revolution, coming on the tails of the Robinhood culture. The Robinhood culture is normally about new investors joining but it seems the floodgates of the market have been opened to the retail investors thanks to digitisation and they are coming in hordes.
This entry of retail investors will be on for the next 2-4 years. We have a slightly different type of market. This is a much stronger market than what we have seen otherwise in the earlier bull markets because earlier bull markets happened without retail investors, particularly in 2007-2008 and even before Covid, retail movement was very weak. Now it is distinctly strong and that is why the backdrop of participation will be different. How it will show up, only time will tell but in the party where there are many people, I think the fun is a lot more.
Some would argue that the new crowd which has invested in the market has not seen a correction. So what happens when the correction kicks in?
Yes, correction will happen and it can be deeper also. It might look like a mini crash. One cannot defy the natural law of the markets. It will happen. And whatever happens, a lot of guys will fall by the wayside and there will be nasty experiences. The IPO market will fizzle out. All these things happen and that is a part of the market cycle. But you should not be scared of these things. It is part of the game.
What I am saying is that if it does not happen, then it is very unnatural and that is the unease right now that it has not happened for quite some time. FIIs are selling shares worth billions of dollars in the last one week but still markets are refusing to bow to them. With billion dollar sales, there should be blood on the Street, but there is no blood on the Street. But that does not mean that correction will not happen. For some other reason, the corrections will happen eventually.
Why are Indian markets outperforming so much? It has lasted for an extended period of time.
We must have unperformed earlier, it is a churn. In 2021, we are doing very well; in 2020 or 2019 we must have done very badly and so it is…
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