But here is the number no one is looking at: 17% of all total accounts were added in the past year alone.
We are seeing an unprecedented flood of retail money hitting the market at a time when macro indicators are flashing yellow. FII selling and DII buying relentlessly. Half of these new accounts are concentrated in just five states, creating a massive, localized bubble of first-time investors who have never seen a real prolonged bear market.
When the liquidity dries up, the exit door isn’t going to be wide enough for 260 million people.
Feels like we are looking at the the biggest retail exit-liquidity trap in history?
Current Nifty PE of 20 is its historical average, last 10 years it used to be 24.
The levels are good for new investors. Hopefully most would rupee cost average if there’s a bear market, which I’m personally of the opinion there won’t be unless there are some really bad triggers.
New investors would have even better longterm returns if the market remains sideways for a while so that their investment accumulates before the next bull run up.
A Nifty PE of 20 looks like a safe haven now, however as per me the valuation is a terrible shield against global liquidity shocks.
When the US market inevitably corrects its massive overvaluation, capital doesn’t stop to check if India is reasonably priced. It just panics. Global margin calls force institutional money to liquidate their liquid assets everywhere, meaning a structural breakdown in the West will drag a perfectly healthy Indian market down with it.
Domestic retail money can sustain a boring, sideways market for a while, but it cannot single-handedly fight a massive global capital flight.
If a US-led macro shock triggers a 20% global drawdown, I dont honestly think Indian retail investors will keep casually rupee-cost averaging, but rather be panic selling.
Correlation of uncorrelated markets does happen in a global market crash but like gold for example, once the leveraged unwinding takes place, structurally sound markets would bounce back much faster than the diseased ones.
Indian IT is anti-AI, I do not expect a dotcom style bust here.
By “anti-AI”,
do you mean to say that Indian IT-firms
aren’t extremely leveraged/dependent on
the wide-spread adoption of the current generation of LLMs
and are diversified enough to bounce back faster if the current “AI boom” fails ?
If yes, then agreed.
Also, perhaps AI-agnostic more accurately captures the sentiment.
Big if. For it to be a bubble, the general public shouldn’t be aware it’s a bubble. If everyone is saying it’s a bubble, it’s not a bubble yet.
The “if” is NOT asserting anything being a bubble.
So, i don’t quote get how “Big if” applies to this.
What aspect are you trying to highlight?
Why??
The logic behind this assertion escapes me.
For example,
one simple explanation why such an assertion cannot be true is -
The market participants are greedy speculators optimistic of finding a greater fool.
To be clear, the “AI boom” can fail
without there being a bubble
with there being a bubble, but without the bubble going pop.
…
The thread contains several “jump to conclusions” with no justifications,
Pavinjoseph was kind enough to point-out one such instance earlier in the thread.
One where the assets being assumed to be correlated could even be inversely correlated.
Other such unsubstantiated potentially hasty generalisations are… (especially over the medium/long-term)
However, i had ignored all that (until now).
since OP’s eventual conclusion was…
Also agreed.
You see potentially correlated assets and wish to diversify.
Kudos to you
Indian market is extremely attractive, don’t know where the doom is coming from. Is there any major economy near even 5% per year for coming decade? And PE is not jumping, still around 20, prices are in line with earnings growth.
Local retail investor who puts 5k a month doesn’t care about INR-USD rate.
