The Nifty is within striking distance of its ATH. An imminent conquest of all-time highs on many indices seems more likely. An ETF launch in the most illiquid space of the market – microcaps. These are just some indicators of a growing need to take on more risks.
Clearly, Indian investors have stayed put on the risk-on trade right from the lows of 2020. And, investors are hungry for more risk even as global investors join them in buying after nearly 18 months of selling Indian equities.
The market is not prepared for this double-engine thrust of liquidity. And, we are heading into a phase where DIIs will hesitate to sell against such a strong buying boom. But, we still have to be very careful as investors. The buying we see is not driven by value.
Value investing is not delivering returns. Blue-chips are doing worse than small companies. The valuation pyramid remains inverted with small-cap being traded at higher valuations than blue-chips. This is undoubtedly a time to invest in a very stock-specific manner with tight control on valuations. But, the markets are in a very different mood and seemingly in a hurry.