Story of Fear & Greed

From suleka.com

Markets are mighty & powerful like Nature & God only. Market can even destroy powerful regimes, as is evident from the examples of Eastern Europe & USSR. But sometimes Indian Parliament and SEBI also commit the mistake to consider themselves GOD only. Then a contradiction and tragedy in Indian Stock Market is also created.

Market is not a bad concept. Market can be very pious also. Spiritualism is the only one way to turn markets healthier. If the people will not be greedy or fearful then only Market will be able to fulfill the expectations of the majority. To check Greed & Fear, Spiritualism is the only remedy. Market also becomes erratic only when majority of people suffer from these two most common viruses of any Stock Market.

Actually, Stock Market is very smart. Nobody can beat the Market. There is no place for emotions in a stock market.Stock market are a risky place and an individual should take his own decisions based on various types of studies of fundamentals & technicals.

Since India was subjected to foreign rule for almost 1000 years therefore pessimism became absorbed in the genes (sanskars) of Indians. Vivekanand was the first person to see this and also the inherent potential of Indians Vis-a Vis Europeans. Tilak and MG took the political message of Swamiji and we became sovereign country.We became free but not the markets since Nehru was neither a protoganist of free market economy nor a believer of Indian values. Although he meekly submitted to the nuances of caste system to seek political milege but he could not tolerate the growth of Indian Businessmen & Enterprenurs. Doctrines of Socialism ultimately failed in Indian context but it resulted into rampant corruption of the Indian society and the corporate India during this period of 1947-1990.

Talents were not recognized in India till 10 years ago .Like any other important thing, Capital Market of India was also highly demoralised and undervalued. Capital Mkt belongs to optimist societies therefore practically there was no Capital Mkt in India inspite of 100 yrs old presence of BSE, which was only functioning like a club of the brokers. The pessimism of our society was once broken by Ambani and later by Murthy to provide it direction, momentum and sanctity. Harshad Mehta is now dead but history will also remember him as a person, who had really popularized and established the real importance of stock market.

A cursory look at 10/15 yrs movement of Dow and Sensex will reveal the extent and quantum of undervaluation of Indian market.Dow increased from3000 to 10000 in last 10/12 years, whereas BSE Sensex could only reach 6000 mark in comparison to the level of 4400 achieved by it 12 years ago. If we take rupee devalution to the extent of 50% into consideration then Sensex in dollar terms is only 3000 at present. All this sorry state of capital market is inspite of recording tremendous growth in last 10 yrs.

But there is one good development also that pessimistic Indian Stock Market got married with American Stock Market few years back. It started taking the clues from the movements in Dow Jones/ Nasdaq now US markets are known for having long and healthy rallies.If Indian Stock market will really follow the US in next 3/4 years then it is expected that India may become free from the 'Perpetual Pessimism' syndrome also. If this happens, then in view of huge & affluent middle class, India may also become a sucecessful & Giant ECONOMY in this decade itself in spite of its unmanageable population.

Historically our market is still undervalued. India had a robust growth in last 10/15 years, which is not properly reflected in the Sensex due to pessimism of Indian society /manipulation by companies/brokers and above all courtesy SEBI, which has also introduced some more childish measures or corrupt practices to control malpractices.

But market is supreme. All the great players of yesteryears like HM/KP/UTI stands defeated now defeated, because none of them believed into the supremacy of the market. On the other hand, the reputation and clout of Tata/Ambani/Murthys etc has increased because they had faith in the market and their contributions were positive only.

To make money in Indian Capital Market really not deep knowledge and planning is required. Indian market also takes large swings due to psychological reasons and provides enough opportunities of profit booking and re-entering at lower levels. If one will have control over greed and fear then money will just flow in. Just buy when everyone is selling (at the lows) and sell when everyone is buying (at the highs). One only need to shed fears when market is low, and need to control greed when market is high by booking profits partially at least. By just overcoming fear and greed one can make so much money in the Indian Stock market, which is probably neither possible elsewhere nor by any other means. Contrarian approach will prove best at least in Indian C/M.

To identify good stocks at lower levels fundamental analysis is useful, while by the tools of technical analysis one can time entry/exit to reap maximum profits.