It has been a bumpy kind of start to the year for the stock market. Investors pretty much everywhere in the country over 2012 have just stayed away from the stock market. "I don't think people believe that they can make money in the market", says Udyan Mukherjee managing editor CNBC-TV18 on Investor Camp.
Below is Udayan verbatim transcript of his comments at the Investor Camp.
We talk about this every morning that while Foreign Institutional Investors (FIIs) have bought so much stock in 2012, every day we read that domestic investors have sold Rs 800-1000 crore. That selling is coming from likes of people who are sitting in this room. They have been redeeming their mutual fund units because their prices from 2007 have arrived now after five long years and in most cases they have been taking money out of the stock market.
Since five years people have not made money in stock markets but last year if people were in the market they would have made much more money and that is something people lose perspective of. If last year in 2012 one had put money in fixed deposits say one got 10 percent and paid 30 percent tax on that. So, the investor will be left with 7 percent.
He (the investor) made nearly 30 percent on the stock index in 2012. If one was in decent mutual funds one would have made close to 50 percent and after one year that is capital gains tax. So, one is tax free 30-50 percent depending on what you bought. 2012 has been a year where people have been taking money out of the market and they have missed out on an opportunity.
That primarily is because people don’t believe that this market run will last. Sooner than later this market will sell off again. People have made mistakes in the past by buying the index above 20000 and this time they will not make that mistake. However, sometimes things are different and may be this time is different.
It will be a painful experience for a lot of people, particularly the retail investors, if the market continues to run away like this and we have another good year in 2013.
Hopes are that market goes up in 2013 though it might be painful for a lot of people. However, may be it will bring them back and may be some of the mistrust will go away. I am hoping that will happen.