Music of the Indian Financial Market – Buy, Sell, or Hold?

Fri, 11 Apr 2025 16:36:04 +0530

Financial market is like a musical symphony made up of different tunes. Our decision to Buy, Sell, or Hold are always influenced by the tune of global uncertainties, inflationary pressures, changing interest rates, and geopolitical tensions.

Equity is the King of Financial Market !

The equity market is the place where we buy and sell stocks or shares of companies. Equity prices presented in a group are called as Indices like- NIFTY is a group of 50 Stocks, SENSEX is a group of 30 Stocks etc. The market price of these shares or stocks jointly contributes to the volatility in these groups or indices. Technically, there are two types of prices for every business or Equity :

·Primary Price: Set by the company's promoters during the first offering (IPO).

·Secondary Price: Decided later through trading between buyers and sellers in the stock market ( LTP – Last traded price)

Every time a trade happens, the stock gets a new price, known as the LTP (Last Traded Price). Since every investor thinks and values companies differently, the LTP keeps changing, leading to price volatility. Whether you are an investor or a financial advisor, you have to deal with this market volatility. You may ask:

"Why invest in equities at all? Why not choose a safer, non-volatile path of Debt ?"

The answer lies in history:

·Over time, equity benchmarks like Nifty and Sensex have consistently beaten inflation.
They have provided double-digit returns over long periods, unlike most other asset classes.

Simply put, equities are the best tool for long-term wealth creation. Volatility and price fluctuation is its nature. That’s why experts say – fall is temporary but growth is permanent !

As a knowledge dose let me share some more details about equity investing and human behaviour:

The price or LTP of any stock depends mainly on two things:

1. Information Available to Buyers and Sellers:

Fundamentals: Company background, ownership, management team
Numbers: Sales figures, net profits, etc.
Business Insights: Competition, new expansions, unique products
Future Predictions: Market share growth, industry outlook

2. Liquidity and Economic Sentiments:

- Strong GDP growth, low inflation = More buyers, rising prices
- Economic slowdown, high inflation = Fewer buyers, pressure on prices
- Liquidity issues or better opportunities elsewhere = More sellers

Equity investing should be straightforward

Once you fix this mindset, the next step is simple - Find the best stocks or equity portfolios. You can do this through

·Professional fund managers (Mutual Funds, PMS, AIFs)

·Direct investing (Opening a D-mat account and buy stocks)

My take on situation in Equity Market :

Looking at the present market , specially in India, the Liquidity is Healthy, Fundamentals are intact and Strong ! Only issue is the negativity in Future growth due to global factors like US tariff actions So, Sellers are offering exits; Buyers are bidding at lower price; consequently, Prices (LTP) are falling with each trade.

What Should You Do as an Investor?

Given this situation, you have three choices:

Sell strong companies just because prices are falling?
Buy quality businesses now available at discounted prices?
Ignore short-term market noise and stay focused on long-term wealth?

I won't comment here on the US Tariff War or its exact impact. But remember:

There is always a consumer for every product. The tariff will not kill the demand of a product
Whether a hotel charges Rs. 1,000 or Rs. 1,00,000 per night — the value matters more than the price.
Market systems adjust over time.
If the fundamentals are intact, negative perceptions can quickly turn positive.

If you are a true wealth builder, you should not be selling in today's market. You should either be buying more or simply holding on!

Shah Capital Services - Blog

Music of the Indian Financial Market – Buy, Sell, or Hold?

The price or LTP of any stock depends mainly on two things:

Equity investing should be straightforward