Monday, August 31, 2015
Diwali may spur bigtime Sensex rally
The Sensex has finally touched its highest close ever at over 21,100 points and is it time to rejoice and hope for another round of phenomenal rise (a bigtime rally) in the benchmark index?
We may remember that the Sensex made its debut in 1980 when it was only at 100 points. Then it rose rapidly to 1,000 points in the late 1990s and skyrocketed to 5,000 points in the year 2000. By 2006, it touched the 10,000 points mark, and it even breached the 21,000 points mark in January 2008.
Then came the global meltdown or the sub-prime crisis, which took a toll on big American (and other) companies and swept the globe, resulting in the Sensex falling way below the 8,000 points mark. This presented one of the biggest opportunities to invest in the stock markets.
Then came the global meltdown or the sub-prime crisis, which took a toll on big American (and other) companies and swept the globe, resulting in the Sensex falling way below the 8,000 points mark. This presented one of the biggest opportunities to invest in the stock markets.
Those who invested in stocks or mutual funds wisely then, could have seen a four to five fold rise in their investment today. And, those who made a killing probably saw their worth jump almost eight fold.
The lesson here is: Always try to identify a new low and whenever a stock market plummets for any unnatural reason or not in a uniform manner, it is the right time to invest (after identifying a new bottom) because the stock market will most probably make up for this loss in the medium to long term.
So, those who invested their money during the 2008 meltdown have made it big today.
Unfortunately, the stock market hasn’t given us such an opportunity in recent times (in the last three years or so) and it seemed the stock market stagnated as it could not breach the 21,000 points barrier.
So, for nearly four years, the stagnating Sensex has been hovering around the 17,000 points-20,000 points mark and those who have invested during this period have just managed to get their principal back but almost no returns. However, this Diwali could be the game changer.
Though it is far-fetched to predict any phenomenal rise seen in the early part of the decade and immediately after the meltdown effect waned, we can hope to make some decent income from stocks and a slew of five and four star rated mutual funds. (To see star rated funds, one may refer to portals like moneycontrol or valueresearchonline).
So, if we are optimistic, we may hope that the Sensex will touch the 23,000 points-24,000 points mark by 2014 Diwali (as it has breached the jinxed 21,000 points mark already) and this would spur the markets, lead to a long-term rally and give investors of stocks and select mutual funds a reason to rejoice, so stay invested!
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