Why the Market is not getting corrected

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The proverb from Gujarati is most appropriate for present market scenario.

The main reason behind the market not getting corrected is the liquidity. Main participant in the market is MF and MF is having #SIP Book of ? 5500 crs monthly which is to be invested in the market every month. Thus Liquidity in MF is root cause for the market not getting corrected and other fundamentals of the market is not supporting the market to grow up more.

Expected 5 to 10% growth in earning will also be not sufficient for bringing market to yellow bend (Fair Value). This way market is going to be range bound in coming months. This may result sideway market.

 Now coming to my starting Gujarati proverb.

Meaning of this proverb is

 "The one who nourishes will become destroyer is natural process."

In current scenario when we are talking about SIP. For SIP we are thinking is a magic wand.

BUT

As on todays scenario in SIPs we have crossed all limits like MORE, MUCH, EXCESSIVE & TOO MUCH.

Now assume above discussed scenario of sideway market. If it continues for one year or more. SIP started by investor keeping in mind SIP as return generator will be dissatisfied.

Remember period of 2011 to 2014, when market was sideway for so long period, at that time long term SIP returns were just 5 to 8% for so many well known high performing MF schemes.

In this scenario of #SidewayMarket SIPs, started by impatient investors, will be stopped and the liquidity of the MF will be reduced and hence support due to liquidity will be reduced. Due to this market will be getting corrected.

This correction will further reduce the returns of SIPs.

In chain reaction of this, the investors having mindset of SIP as a return generator will start redeeming their money from SIPs, will results end of excessive liquidity from market hence the corrections will continue till the #FairValuations achieved.

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