Who is taking Stock Market to Newer Heights?

Introduction:

The Bombay Stock Exchange (BSE) has disclosed some data and two factors come out which can be the reasons that are driving the stock market into new heights. One of these 2 factors which is Fear of Missing out (FOMO) is pretty common in the market and there is another factor present which is There Is No Alternative (TINA). So what is the data presented by BSE is indicating towards these 2 factors:

Data by Bombay Stock Exchange (BSE):

1. The registered number of users in Bombay Stock Exchange (BSE) has crossed a mark of 7 Crore and the journey is quite interesting:

• The journey from 3 Crore to 4 Crore took 939 days which is over 2.5 years.
• The journey from 4 Crore to 5 Crore took 652 days which is less than 2 years.
• The journey from 5 Crore to 6 Crore took 241 days which is less than 1 year.
• And the journey from 6 Crore to 7 Crore is covered in just 139 days which is under 5 months only.
• This shows that the count of new users has increased drastically in recent years which led to providing uplift to the market.

2. Another point from the data disclosed by BSE to look upon is the age category of the users:

• The age of users ranging between 40 to 50 years comprises only 13%.
• And the age of users ranging between 20 to 30 years comprises 24% out of the total users.
• The age of users ranging between 30 to 40 years accounts for 38% of the total 7 Crores users.
• This sudden increase in the number of users between 20 to 40 years has increased in the last year during a pandemic. Also, this has led to more inflow of capital in the market.

Factors behind Market Touching Newer Heights:

1. Fear of Missing out (FOMO):

• The investors are of the view that the market is going up and they should keep on investing.
• The influence of family, friends, Twitter, telegram, etc. on the individual is also driving the market.
• We have seen the impact of a sell-off in the market in March 2020, but after that around 2 Crore, new users joined the BSE in the last 1 year.

2. There Is No Alternative (TINA):

• If we talk about Fixed Income Instruments like FDs, the returns are coming about to be very low and the equity market is looking for a better option for the investors to grab the opportunity.
• The Debt market, as well as Gold, have also shown sluggishness in the market in recent times whereas Real Estate has a large ticket size to enter, hence, it can be ruled out as well.
• People also feel that investing in Mutual Funds does not provide adequate returns when compared to Equities. And the investor feels that they are expert and can manage their funds better.

Conclusion:

There is a beginner’s luck that is playing pretty well in the market and the new investors are in thought that they have achieved victory. But the market will teach the lessons the hard way and it has done this many times in the past as well. Do enter into the stock market with proper knowledge and research. Do reach out to a financial advisor before making any investment decision.