Is it the right time to invest in Indian share market?

Yesterday, Sensex and nifty made its fresh lifetime highs. The Nifty managed to hit 11,500 for the first time ever, while the Sensex comfortably traded above 38,000-mark.

Those who have already invested in the market are enjoying the sweet ride. However, for the beginners- the situation is quite confusing. The big question for them is- Is it the right time to invest in Indian share market? Whether you should start investing in stocks now or should you wait. 

In this post, we will answer the question of what is the right to invest in the Indian share market. Let’s get started.

Is it the right time to invest in Indian share market?

Is it the right time to invest in Indian share market?- This question has been asked again and again whenever the market makes a new high (or low). When the market is high, people would want to wait for some correction assuming that the indexes will fall in upcoming days. On the other hand, when it is low, people will expect that the market might go down further. So, in both the situation- people will are confused whether it is the right time to invest or not.

Nevertheless, bulls and bears are part of the market of the market. Even when the market moves sideways, people can argue that there’s not much happening in the market, and hence not a good idea to invest right now.

– Timing the market is really difficult. Especially, for the beginners.

Even for the seasoned investors, timing the market precisely and consistently is not possible. Buying at the lowermost price and selling at the topmost is an investing myth. You can only define a buying or selling zone, not the precise point.

In short, you’ll never be able to find the best time to enter the stock market. The best approach here is to just get started. Maybe start small and increase your investment with time when the valuation is cheaper.

– Time in the market is more important than timing the market.

Time in the market is always more important than timing the market. Let’s assume that you’ve invested in a stock at Rs 150 and ten years later it appreciated to Rs 1,000. Here, it won’t matter much whether you bought that stock at Rs 120 or Rs 180 as long as the profits are decent. Because you stayed invested for a long time, the power of compounding worked in your favor. However, if you try to time the stock exactly at the bottom- it might be possible that you never invested in that stock at all.

– Invest in companies, not in the share market.

Until and unless you are investing in the index fund, it doesn’t matter much whether Sensex/nifty is high or low.

There are lots of good opportunities to invest outside the index. The market may be high/low, but there will be ample opportunities to invest in the individual stocks. It’s not necessary that all the stocks will be on their 52-week high during a bull market (or at 52-week low during their bear market). There are thousands of listed companies in the Indian stock market. Even during the bull market, you can find good companies at a reasonable price.

In short, focus on investing in companies, not the share market. If you keep looking for good companies, you’ll eventually find a few good ones. On the other hand, if you just follow the market- Sensex and Nifty– you will only keep looking for the answer to whether its the right time to invest in Indian share market or not.

– Follow the Rupee Cost Averaging Approach

As discussed earlier in this post, timing the market is really difficult. It is really burdensome to know the right time to invest in Indian share market and it is next to impossible to buy exactly at the bottom and sell at the top. If someone says he/she has been able to do it, they just got lucky.

An easier approach to follow here is rupee cost averaging. If the company is fundamentally strong and worth investing,  however, you are not sure whether the market will go high or correct, then just make a small position. Add more stocks every month when the price changes significantly.

For example, if you are planning to make an investment of Rs 20k, then do not invest all at once if the market is uncertain. The averaging approach suggests investing 20% of 20k i.e. Rs 4k right now. Add more stocks in the same proportion when the price goes down or up after a regular interval. Following the Rupee Cost Averaging approach will help you avoid the technicalities of timing the market exactly.

Conclusion:

“The best time to invest was yesterday, the next best time is today and the worst time is tomorrow.”

If you are trying to time the market based on the indices, then you might never be able to find the right time to invest in Indian share market. Instead, you should focus on the individual stocks. If you can find a good stock at a decent price, then buy it- no matter whether the indexes are high or low. Further, if you follow the individual stock, you can find good investments. If you follow the indexes, you will find just the numbers.

That’s all for this post. I hope it was useful to you. Happy Investing.

Kritesh Abhishek

Kritesh (Tweet here) is the Founder & CEO of Trade Brains & FinGrad. He is an NSE Certified Equity Fundamental Analyst with +7 Years of Experience in Share Market Investing. Kritesh frequently writes about Share Market Investing and IPOs and publishes his personal insights on the market.