Weekly Market Review - common behaviour of investors, the Indian pharma sector, guide to ETFs, & more.
-Weekly Market Review-
Sensex: 40,685.50 ▲ 1.75%
Nifty: 11,930.35 ▲ 1.42%
Buy low, sell high. Very simple.
Every investor, be it a stock market investor or a mutual fund investor, would have heard this line. Of course, this is far from simple. Because when you observe the markets, you’ll realize there are many investors who struggle to simply do this: buy low, sell high.
And the primary reason for this is that the markets keep moving up and down all the time. And people react to them. You might buy now, and the markets might go down tomorrow, and you might think you’re in a loss. Seeing that figure, some people cut their losses and exit the markets. And they suffer an actual loss in such a case. This is what makes investing tough for many.
Seeing markets go up and down. The markets hit a very turbulent time in March 2020. In the months after that, investment in mutual funds remained net positive (according to AMFI data).
This was a very good sign - because it seemed like investors were riding out the crash. They weren’t panic selling. And since then, the markets have recovered to levels that are very similar to pre-pandemic levels.
Here comes the surprise. In the months of July, August, and September, when the markets have seemingly recovered, the net amount invested in equity mutual funds is negative.
This means more money has been withdrawn than invested - after the markets recovered. Why?
Well, many investors say they are happy to have recovered their “losses”. And now they want to exit. Many of these investors say that they’d get back in the markets when things turn good again.
Here’s a question: how do you know when things are “good” again?
And by the time things are “good” won’t the markets already be high?
In the last 20 years, the markets have given returns of about 12% per annum. And this includes big crashes like 2008 and even the March 2020 crash. This is no indication of future performance, of course. But this 12% is for investors who stayed in the markets through the ups and downs.
What about those investors who sold right before the markets crashed and waited until the markets started recovering again?
Yes, those investors would have made much better returns. But there’s one problem - there aren’t many investors who have successfully been able to do that.
When the markets are falling, how do you know when they have bottomed out and will start climbing? And when they’re reaching new highs, how do you know when they’re going to crash?
So far, history has repeatedly shown us that time in the market is more important than timing the market.
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Pharma Sector Overview
Just a couple of years ago, in around 2017, stocks of the pharma sector in India were performing much poorer than expected. They had performed well a few years prior to that but had seemingly lost their sheen.
Come 2020, things have been looking rosy for pharma stocks. But why is that?
Of course, the pandemic has aided things for the sector. But that’s really not all.
India pharma companies play a big role in the international pharmaceuticals supply.
Indian Visas Restored
India has restored all visas for foreigners after 8 months of suspending them. Back in March 2020 when the lockdowns first started, India had suspended all visas to the nation. Now, they have restored all visas except tourist visas.
Foreigners will be able to travel to India for purposes like business, conferences, education, and research. Person of India Origin (POI) card and Overseas Citizen of India (OCI) cardholders will be able to travel freely to and from India also.
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