Music of the Indian Financial Market – Buy, Sell, or Hold?
Introduction
Financial market is like a musical symphony made up of different tunes. Our decision to Buy, Sell, or Hold are always influenced by the tune of global uncertainties, inflationary pressures, changing interest rates, and geopolitical tensions.
Equity is the King of Financial
Market !
The equity market is the place where we buy and sell stocks
or shares of companies. Equity prices presented in a group are called as
Indices like- NIFTY is a group of 50 Stocks, SENSEX is a group of
30 Stocks etc. The market price of these shares or stocks jointly contributes
to the volatility in these groups or indices. Technically, there are two types
of prices for every business or Equity :
·
Primary Price: Set by the company's promoters during the first offering (IPO).
·
Secondary
Price: Decided later through trading
between buyers and sellers in the stock market ( LTP – Last traded price)
Every time a trade happens, the
stock gets a new price, known as the LTP
(Last Traded Price).
Since every investor thinks and values companies differently, the LTP keeps
changing, leading to price volatility
Whether you are an investor or
a financial advisor, you have to deal with this market volatility. You may ask:
"Why invest in equities at
all? Why not choose a safer, non-volatile path of Debt ?"
The answer lies in history:
·
Over time, equity benchmarks like Nifty and
Sensex have consistently beaten inflation.
· They have provided double-digit returns over long periods, unlike most other asset classes.
Simply put, equities are the best tool for long-term wealth creation. Volatility and price fluctuation is its nature. That’s why experts say – fall is temporary but growth is permanent !
As a knowledge dose let me share some more details about equity investing and human behaviour:
The price or LTP of any stock depends mainly on two things:
·
Information Available to Buyers and Sellers:
o Fundamentals: Company background, ownership, management team
o Numbers: Sales figures, net profits, etc.
o Business Insights: Competition, new expansions, unique products
o Future Predictions: Market share growth, industry outlook
·
Liquidity and Economic Sentiments:
o Strong GDP growth, low inflation = More buyers, rising prices
o Economic slowdown, high inflation = Fewer buyers, pressure on prices
o Liquidity issues or better opportunities elsewhere = More sellers
Equity investing should be straight forward :
Once you fix this mindset, the next step is simple-Find the best stocks or equity portfolios. You can do this through:
Buy when you have liquidity and confidence in fundamentals.
Sell if you find a better opportunity.
Hold to build wealth over time.
Once you fix this mindset, the next step is
simple - Find the best stocks or equity portfolios. You can do this through
·
Professional
fund managers (Mutual Funds, PMS, AIFs)
· Direct investing (Opening a D-mat account and buy stocks)
My take on situation in Equity Market :
Looking at the
present market ,specially in India, the Liquidity is Healthy, Fundamentals are
intact and Strong ! Only issue is the negativity in Future growth due to
global factors like US tariff actions
So, Sellers are offering exits; Buyers are bidding at lower price; consequently, Prices (LTP) are falling with each trade.
What Should You
Do as an Investor?
Given this situation, you have three choices:
Sell strong companies just because prices are falling?
Buy quality businesses now available at discounted prices?
Ignore short-term market noise and stay focused on long-term wealth?
· There is always
a consumer for every product. The tariff will not kill the demand of a product
· Whether a hotel
charges ₹1,000 or ₹1,00,000 per night — the value matters more than the price.
· Market systems
adjust over time.
· If the fundamentals are intact, negative perceptions can quickly turn positive.
If you are a true wealth
builder, you should not be selling in today's market. You should either be
buying more or simply holding on!
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