When dumb money replaces smart money.

"Domestic equity market benchmarks BSE Sensex and Nifty ended in the green, after oscillating between gains and losses throughout the session on Monday. BSE Sensex recouped all the losses and gained 145 points or 0.24 percent to end at 60,967, while NSE's Nifty closed above 18,100, up 10.50 points," FE. "My view is that surely we will be around 100,000. The question is whether that number is three years away or is it five years away. Otherwise 100,000 looks fairly certain," said Nilesh Shah, MD & CEO, Envision Capital. "The recent technical breakout of the Nifty50 index, which helped it climb over 2,500 points in a matter of months, is fuelling exuberance among option traders in India. Traders are steadily loading up on deep out-of-money Call options of the index in the expectations that the rapid move would continue and enable them to pocket asymmetric gains in the process," ET. "One such bet is that the benchmark Nifty50 will climb above the 20,000 mark by the end of the year, a possibility that seemed outlandish two months ago, but highly probable now." "I had said ... that while I did not think a great bear market was coming simply because 10-year rolling returns show the market is still below the trend line," "But then after this kind of runup, one expects some correction," said Devina Mehra. "A lot of emerging markets have been increasing rates," but, "In India, I do not think we will raise rates in a hurry." In companies, whose shares have fallen sharply recently, "FIIs and DIIs have trimmed their holdings in the past quarter", wrote Jimeet Modi. "This behavior corresponds to the Dow Theory's last phase in which institutional investors (considered smart money) progressively book profits, while retail investors absorb these volumes and sustain the rally." When markets plunged due to the pandemic, institutional investors started buying stocks because central banks released trillions of dollars in liquidity, and "Seeing such a quick rebound in stocks prices, the entranced retail investors entered the market with innate confidence." Most of these are new investors. "The number of investor accounts with Central Depository Services (India) Limited (CDSL) has more than doubled from 2.12 crore (21.2 million) to 4.64 crore (46.4 million) in September 2021. In fact, more than half of the additional 2.52 crore accounts -- 1.3 crore -- have come in the last six months between April and September 2021," TIE. New investors may panic when the market corrects because, "In absolute terms, a 10% fall from levels of 60,000 -- or about 6,000 points -- would appear, to inexperienced investors, to be much bigger than than a 10% fall when the Sensex was at 10,000." "There is an absolute frenzy in the market and a perfect case in point to explain that frenzy is that since April till now, there have been 26 IPOs of which only six are trading below their listing price and 20 are trading very far up! There are so many IPOs which have given 100-120% gains," said Rajat Sharma. "If this is not a frenzy nothing is." Dumb money replacing smart money. How dumb is that?