Stock prices could slide but don’t expect it to happen one fine day
Live MintIndividual investors in India have taken to the stock market like never before. Now, if one were to plot this increase in unique investors against the NSE 500 index, one would see a strong correlation: as the stock market has gone from strength to strength, it has attracted newer investors. As new investors have bought stocks, the stock market has risen further, and that has attracted even more new investors. It has also let venture capital funded loss-making firms with terrible financials to sell shares at excessive valuations and get listed on the stock market, riding that wave of nationalism and new-era thinking. Also, as Shiller writes: “Stock prices are essentially formed in the minds of the millions of investors who buy and sell stocks, and it is unlikely that so many people would simultaneously arrive at sudden and enduring changes in their long-run perceptions."