Indian Stock Market......the COMING CRASH

If you are an investor interested in the Indian market, don’t buy now. Wait for the NEXT CRASH, which is coming. After the crash, invest into some SENSEX or NIFTY mutual funds, besides some sector mutual funds.

Now, why am I in the minority, talking about an impending crash? Let me go into details of my reasoning.

“Sharp falls” in the SENSEX or Nifty are, UNLIKE in Western or Far East countries, in majority of cases, UNRELATED to economical factors. In India, factors like political changes, market hype, internal business feuds, rumours, etc. play a big part.

People buy & sell in hordes. Now, it is not necessarily triggered by them. Last crash in May 2006 was, according to the opinion of many, INITIALLY due to FDI & FII selling. But, ultimately the landslide was mainly due to we, the investors, panicking.

In fact, I, too, panicked. When it slid from 12600 to 10200, my friends told me, “ Mr.Mukherji, what are you waiting for? You’ve already lost 20%, they say it’s going to touch base at 7000, or even 6000. You’ll go bust.”

I did panic. I did make the mistake of offloading 25% of my portfolio. But then, I made it up later. It went down to around 8800, as far as I remember. And today, it’s at 14,200 in 7 months. Which means a climb of around 60% in 7 months ! I won’t be surprised if it touches 15,000 in the next 2 weeks.

But, I’m waiting for the next crash. It’s a ‘coming, fellas.

Now, why would that be???

It’s a culmination of many factors :

1. Oncoming political instability after U.P. elections.
2. “Over-inflated” stocks
3. Overseas acquisition by steel majors not living up to expectations.
4. Over-heated IT stocks.
5. Petroleum stocks can face problems due to wrong geopolitical moves.
6. Possibility of a global mini-recession.

7. Flight(temporary ;-) of foreign investment to other emerging markets.

And lastly, you can add that cardinal sin : GREED. I know people who entered at 13,000 & invested probably half their wealth in the stock market. As they suffer losses, there’s going to be rumours, which will fuel panic.

And panic will lead to further crash.