How to navigate the hot market

Are the markets poised for a correction? First and foremost, we have been expecting a correction for the last four years. Even at the peak of Covid, the market went down, and after that, it rebounded in just a month's time, and the ascent hasn't stopped since then. The stock market's level is basically an aggregate of the underlying companies and their ability to generate returns. While pockets of the market might look expensive, I don't see anything alarming as of now. After all, SIP inflows are still rising. Besides the SIP money, the PF (Provident Fund) money and NPS (National Pension Scheme) money are rising. Suggested read: A personal market indicator NPS money comes every month, primarily from private sector employees, and it is invested in the top 200 companies. Unless we face some calamity, where a lot of people get scared and impair the earnings capability of Indian companies, a sharp decline would be a surprise. That is something we can't anticipate. Besides that, on the international front, the interest rates in the US have come down. If interest rates come down, foreign investors who pulled out might start investing again. India remains strong. All the positive aspects of India's growth story are still at the forefront. We are beginning to emerge as a manufacturing hub. Parts of the market may look expensive, but there's a possibility that in one or two quarters, if the market remains steady and earnings rise, valuations will become cheap again. Just because the market has risen doesn't necessarily mean it will come down. Investors need to adjust their mindset. That said, it could still be disappointing for many

This article was originally published on October 04, 2024.