Sensex at 50,000: Ride the wave, but be aware of the bumps


By V.K. Vijayakumar
Mumbai, Jan 21 |
Sensex at 50,000 is, indeed, a proud day not only for the markets and investors, but for the economy also. The market is regarded as the barometer of the economy with a potential to discount the future. If this is true, the Indian economy is on a strong comeback trail with important implications for markets.

The highs and lows taking the market to record highs

There are several highs in the market now. Globally liquidity is at a record high and consequently FPI flows are at record highs. Supporting the capital flows, Q2 corporate earnings also are at record highs and early results suggest the continuation of this trend in Q3 too. Reflecting sharp rebound in economic activity, GST collections (Rs 1.15 lakh crore in December 2020) are at record highs.

There are some macro variables that are negatively correlated to the markets. These variables, like interest rates and corporate taxes are at record lows. The tailwinds of these highs and lows have combined to take the market to record highs.

A question that is often asked during such record levels is: What should investors do now? One important lesson from stock market history is that it is very difficult, almost impossible, to time the markets. That’s a tough call even during normal times, made tougher in these abnormal times.

Let’s be clear about some important facts. The market is overvalued from the perspective of PE multiple and Market cap to GDP. One year forward PE is around 24 and market cap to GDP ratio is above 1. The over valuation is around 50 per cent higher than historical averages. But it is important to remember that markets can remain over-valued, even irrational, over an extended period of time. It is equally important to appreciate the fact that global liquidity is abundant and developed market interest rates are expected to remain near zero through 2023. This will sustain capital flows to emerging markets like India keeping the markets buoyant.

Two things can happen: One, if the economic growth and corporate earnings recovery, currently underway in India, gathers momentum, markets will remain buoyant and can go higher. There are optimists who believe that the next few years are likely to witness sustained impressive GDP growth rate and corporate earnings. If this scenario pans out, the bull may charge higher from here. On the other hand, if growth recovery loses steam domestically and inflation returns in the developed world forcing the central banks to exit from the loose monetary policy, there will be capital outflows from emerging markets like India leading to sharp corrections, even big crashes. Let’s keep our fingers crossed.

Water the plants and remove the weeds

A big lesson from the stock market history is that wealth is created by remaining invested in the market and not by moving in and out of markets, at regular intervals. Investing in high quality growth companies — consistent compounders — is the time tested foolproof strategy for wealth creation. So, remain invested in high quality large-caps and invest in mid-small-caps through the SIPs in mutual funds. Many low quality stocks too have run up in this euphoria. Even good portfolios will have some laggards like that. This is the best time to get rid of such non-performers. As the saying goes, “water the plants and remove the weeds.”

(V.K. Vijayakumar is the Chief Investment Strategist at Geojit Financial Services)

Source: IANS

Sponsors Posts

From being a developer to a CEO in California, Manthan Dudeja's top tips to make money while you're still in college

From being a developer to a CEO in California, Manthan Dudeja's top tips to make money while you're still in college

Gone are the days when one had to finish school, college and subsequent years in getting trained to be able to sustain oneself with decent income. Today, what you earn eventually depends upon your skillset and how early you got started to build an expertise in your domain.

Manthan Dudeja, who currently lives in California and is still in his graduation years, understood the perks of starting early and is now a CEO who has worked across a plethora of jobs, from IoS programming to website development and blogging to trying his hand at Amazon Associates.

In conversation with this dynamic entrepreneur, let’s decode the various options for freshers to make a side income while they are still in school/college –

  • Content writer/Editor

Manthan explains how he started off by writing for blogs with whatever knowledge he had and with the help of internet, this could be by either writing for your own online blog, for instance Manthan was interested in Tech, so he was writing for his blog ‘TechCrack‘ or for someone else in the capacity of a content writer.

It’s not difficult to get started if you have the basic understanding to develop a ‘flow’ while writing a piece and the skill to write what suits your target audience.

  • Software developers/ Programmers/ Coders – Today, software/app developers are earning more than the average of $60 an hour by working remotely. There are a host of online paid/free platforms providing trainings to acquire such skills, Manthan has been an app/website developer for the longest time and by far, this skill has given him the best results for his work.
  • Digital Marketer/ E-Marketer-

Your journey to become a digital marketer starts the day you take the step of self-educating yourself and learning the tricks to attract potential customers either by way of Google, Facebook, or any other digital platform by a host of scalable ways on the internet, undoubtedly, digital marketing is the hottest online work from home concept of this decade.

Manthan is today a successful digital marketer who has equipped himself with the advanced knowledge of online ads on various mediums and has effectively used these skills to generate incredible revenue over time.

These are some of the best ways to get started, according to Manthan, all


Sponsors Posts

2 BHK Residential Apartment for Sale in Aadhya Hills Bhita Jabalpur

2 BHK Residential Apartment for Sale in Aadhya Hills Bhita Jabalpur
Aadhya Hills is one of the residential development. It offers spacious and skillfully designed apartments. The project is well equipped with all modern amenities to facilitate the needs of the residents.
  • Property type: Residential Apartment 
  • Offer type: For Sale 
  • City: Jabalpur 
  • Zip Code: 482001 
  • Locality: Bhita 
  • Landmark: Bhita 
  • RERA Registration Number: P-JBP-18-1599 

For more details please click here or visit


Please enter your comment!
Please enter your name here