Nifty Index after registering new life time highs at 25078.30 level on 01st August 2024 then open gap-down on Friday 02nd August 2024 with major selling pressure coming from the global markets and trigger buzz among investor communities will this tigger for global sell-off or global stock market crash in coming days?
Now the question of caution among all Indian investors is this end of strong bullish rally? Will there be a big crash going ahead? Is the Indian stock market in bubble? This question is common among investors and traders’ communities, as everyone has a fear that the bullish rally might end soon.
In my communication with my clients and others, this question is almost asked by everyone: when will the correction start or is any big stock market crash coming?
While everyone has his/her point of opinion of stock market, why stock is strong bullish to when big fall or correction will come. Some say India’s strong economic outlook with growing GDP numbers, a better macro picture, a majority and stable central government, RBI economic-friendly policies, Indian market now totally depends on retail investors, we are no longer as prone to FLLs selling as this was the case some 5 to 7 years ago, growing participation in mutual funds with inflows coming strong in equities, etc.
While the above reasons are correct, what everyone misses is the big picture. Yes, the global stock market from US major Dow Jones, Nasdaq, to UK FTSE 100, Germany DAX, France CAC 40, Canada TSX Composite, Japan’s Nikkei, Taiwan’s Taiwan Weighted, Indonesia’s Jakarta Stock Exchange, and Australia’s ASX 200 are all at life-time highs or near-life-time highs, including India’s BSE Sensex and Nifty 50.
I would rather say all these global stock market charts over a long period of time are copies of each other with similar trajectories.
This blog discusses how different countries have very different economic, social and political policies and different macro and micro-economies, but what’s similar is that all these countries stock exchanges have very similar long-term chart patterns.
The expectation I found was only for the Chinese stock market which is inverse to the global stock market going in a strong downtrend. Some other day, I will write about how this will affect other global stock markets in the future.
Then major Japanese Stock Market crash as Japan offer lower interest rates where investors borrow money at cheaper rates to invest into high interest rates economies with difference is their major profit. Then why the sudden fall comes into global stock market? Reason is recent US Fed indicating of interest rates cuts in coming months triggers this global sell-off as opportunity to invest at higher interest rates economies ending soon triggering sell-off.
Conclusion: Indian Market are truly in-sync with global market but this may only give correction not major crash as anticipated by many as Indian Economy not that effect by interest ratee difference advantage compare to other developed countries. The correction provides good opportunity to invest in fundamentally strong stocks.
