19000 Sensex to Nifty 19000... Moving to NIFTY 65000..Invest for Long term

 Every time the market goes up the heartbeat goes up for two types of investors 1) Those that missed the investment opportunity for making quick bucks 2) those types of investors who want to do the investment at higher levels but are scared to invest. Recently in a couple of client meetings ad investor seminars, I came across those investors who are more sceptical to accept that the market has yet more journeys to cover in the next 7 years till 2030. Investors commented that historically whenever they have done investment in higher levels of the market they have witnessed a sharp fall and it never back to the price at which they invested when the market was high. Well, this time history may not get repeated since there are a number of factors which have changed.

19500 might go up to 20000 but that level is not the end of the world. Profit booking short-term hiccups are going to remain there but the current Indian is not the old India. The fundamental aspect of the market and economy has changed which one should accept and understand. Those who are thinking that one should have done an investment when the market was 17000 levels well today’s 19500 might be cheap keeping 25000 levels for NIFTY in the next few years.

In FY-23 it was found that the Systematic Investment plan increased 77 per cent in the year ended March to ₹84,224 crore against ₹47,619 crore logged in the previous financial year. The total amount as of date stands around Rs 1.5laks cr. Further around Rs. 1.57-lakh crore into index funds and ETFs in FY23. All these funds have simply got deployed into the financial market. These numbers will only grow over the next 10 years or maybe more.

 If we look at the market data of BSE Sensex and NIFTY 50 over the last 20 years from different perspectives we find that a particular segment of investors have always lost who lived by short-term gains and went for frequent redemptions and stoppage of investments.  In short, those investors who did not have any belief in their investment or financial advisors and always tried to out beat the basic principle of long-term investing. When the Nifty was 2008 in 2004 Sensex was at 6493, over the next 5 years  Nifty became 6135 whereas Sensex became 19445 and Today in 2023 the Nifty is 19445 and the Sensex is 65000. This reflects that over the next 10 years, we should be prepared for some higher numbers keeping the compounding factor in mind.  Now, one can realize where and which type of investors lost money and could not make much return as compared to what the market gave.

The current rally of the market is based on many positive factors domestically but most importantly it’s the new generation of investors who are more focused, calculative and have a strong vision about wealth creation. This generation does not come from the background of the Harsahd Mehta and Ketan Parekh generations. This generation does not have the fancy of having investments only in real estate and gold just like the previous generation. It has been found as per the RBI data that Indian households have 76% investments in real estate followed by 15% in Gold, 4.8% in equities and the rest in banks/FD and debt.

Now this 76% exposure in real estate is getting diverted into the Indian financial market followed by debt investments from retail clients getting diverted into the equity market.  Retired investors have understood that Interest volatility does not leave the historically lucrative option of doing investment and staying invested for 5 years or 7 years in Bank FD or corporate FD products.

The market will witness short-term profit booking and based on the current numbers of vegetable prices it seems that inflation for July and August might be on the higher side due to issues coming out of climate. Rural demand is not expected to be poor since the current prices lead to significant earnings for rural India. Urban consumption might get slowed but not much is expected from rural India.

The current GST numbers reflect that capital rotation within the Indian economy is active and the demand and supply factors are well placed. The Indian banks and NBFCs are well poised for stupendous growth with less baggage of NPA which has been a historical barrier for growth. Indian banks' gross bad loans fall to a 10-year low of 3.9% as per the RBI Financial Stability Report. Further, the job market has grown up significantly and also the EPFO fund also does 15% investment in the Indian capital market from other different sources. The share of women among new subscribers grows to 26% in FY23 from 21% in FY19; the share of young people (18-28 age groups) getting formal jobs has risen to 66.5% in FY23 from 62.1% in FY21. This leads to more inflow of investments through SIPs and other formats into the capital market.

Further, the consumption market has changed dramatically and Digital services are fast becoming integral to India’s 700M+ internet users, which includes 350M digital payment users and 220M online shoppers. Well Apple SHOP in BKC which got opened in May 2023 Delhi and Mumbai have grossed monthly sales of more than Rs 22-25 crore each which itself is big proof of consumption.

India’s per capita net national income (at current prices) for 2022-23 stands at INR 172,000, according to estimates from the National Statistical Office (NSO). This marks an almost 100 per cent increase from the per capita income in 2014-15 – INR 86,647 – when the Narendra Modi government first came to power. The per capita income of India has also grown to  $2,257, in 2021 by  18.12% from 2020.

 The historical journey of the market is known to every investor but the behavioural aspect of the investors towards short-term return, and profit booking followed by SIP investments gets stopped every moment. Today the Mutual Fund Industry has an SIP book of Rs.14000 cr but the actual SIP which gets into the market is around RS.7500 cr. The net inflows accounted for 54 per cent of the highest-ever gross SIP inflow of ₹1.56-lakh crore logged in FY23, according to data from the Association of Mutual Funds in India.

 The reason is that we Indians are always focused towards short-term gains and less focused towards the long-term goals of wealth creation.  Before investment, every investor needs to have a details idea about the behavioural aspect of investment and his belief system. Yes, the belief system of an investor towards investment is the key factor to be ascertained then only an investor can make wealth. Those who will follow the financial advisor and will not try to outsmart the market will be real wealth creators.

Stop timing the market and stop all activities which lead to an investor not creating long-term wealth.  Understanding one’s own belief system for investing and having a clear vision for the same is highly required if you want to be part of Nifty to 65000 from the current Sensex of 65000 levels.