💥VALUATIONS vs. GROWTH: The Biggest Mistake Retail Investors Make💥
FII selling has increased today. Then how come Nifty50 has increased? When FIIs sell, they sell largecap stocks. Then how come big, high-weightage stocks were positive?
Previously, when FIIs were selling heavily, TCS, Reliance, and HDFC Bank used to fall. But now, suddenly, how has buying started in those high-weightage stocks? The objective is to lift the Nifty50 index and maintain a positive mood before the Jio IPO listing. If Nifty50 underperforms, Jio IPO could face subscription issues.
This is why big players are selling smallcap and midcap stocks and buying selected largecap stocks to lift the Nifty50 index. Some mutual fund houses and high-frequency traders are involved in this pump-and-dump strategy to keep Nifty50 positive.
But keep one thing clear: index manipulation cannot last long.
The market is hungry for growth. This is why FIIs are not coming to the Indian market because they do not see enough growth. In the share market, money flows only towards growth. This is why many of our multibagger stocks have delivered multibagger returns even in an underperforming market because they have strong future growth potential.
Why do 90% of people fail in the share market? Because they look only at valuations. They invest based on attractive valuations, and after failing, they blame the government, Trump, war, crude oil prices, etc. They fail because they think they can make money by investing in stocks with attractive valuations.
But the market does not look only at valuations; it looks at future growth, whatever the valuation may be.
Now, today, AI stocks fell because of one negative news item about high inflation in the US. Suddenly, people panicked and started selling AI stocks in India. The same incident happened last time when many AI stocks in the US crashed, impacting our AI stocks as well. But within the next month, all those stocks hit all-time highs again. Why? Because the market is seeing strong future growth.
One or two days of panic selling will not change the prospects of high-growth stocks. This is the time when maximum retail investors exit because they do not understand future growth. Yes, they understand price movements based on technical charts. As soon as a stock price falls, they run away. They do not understand that, in the share market, money always chases future growth.
Now, many so-called experts will come forward and say that the IT sector has become attractively valued. These are the experts who never make profits from the market because people with this valuation mindset often fail to identify the right growth opportunities. They buy attractively valued stocks and become long-term investors.
This is the story of the share market: VALUATIONS vs. GROWTH.