Friends – for a long-term investor, the markets have been full of surprises since covid.
In Q2 2019 – when all of us thought that the markets will be bearish due to the lockdown and the fear of uncertainty, the market started it’s journey up. This was because of the retail investors working from home suddenly had time and money at hand. Also, the global markets went up due to the unprecedented loosening of monetary policy by the central banks across the world.
Now we have the opposite happening –we have recovered enough to say that we are past the covid scare. Globally there is now tightening of the monetary policies by central bank. They are now focussed on controlling the runaway inflation that was triggered by increase in consumption and shortages due to supply chain disruptions globally.
So since Oct 2021, when we hit the last peak of 18604 in Nifty, the Indian market have been range bound. We have seen six months of decline and 4 months of growth in Nifty since then.
So the question in our minds is what next?
I believe that the markets are poised to go down.
Not just in India- but globally.
More so in India, as now we see that the Indian Rupee is depreciating, after holding out for the past few months. FII money will flow out of India in an increasing pace as the Indian Rupee depreciates and that will hasten the fall.
How much can it go down?
That’s a difficult question to answer – but a 15% downward journey to 14500 levels from the current 17000 levels is something that I can clearly see.
Not sure of the levels below that.
So what should we do?
Each one of us have to make our own decisions.
Remember, if you exit, you will need to pay tax on capital gains (15% for short term and 10% for long term capital gains). So take your own call.
But remember that there is a 3-6 months of bearish phase ahead of us.