EMOTION AND ECONOMICS

The Indian stock market is swinging like a Yo-Yo. The market is trying to find its groove but so far has not been able to do so. World market cues are also baffling. The question of liquidity due to recent policy changes is a major laggard in stock market.

But is the situation should not be so bad in Indian market. Indian stock market is going up despite some small hick-ups here and there if we consider in a long term perspective. The market index is in overall Bullish trend.



The basic tenets of stock market say: the market depend on emotion of traders. When greed overcomes fear it is a bull run. But now it seems fear is overcoming the greed. Should we be prepared to have a bearish phase of our market?

The Sensex and Nifty movement yesterday and gap down opening today illustrates the fear. Some development in Europe, which may not have much bearing in our market has resulted in a solid tanking of our market. The fear is back.

Small investors are to exercise extreme caution at this point. Bearish phase historically never benefited small investors. It is too complex to make profit from a bear market for a small investor.

Book profit
Keep some money in your pocket

may be the slogans for the next week.