FOMO and herd effect.

"Market participants believe that Indian equity markets will continue to command a valuation premium compared to the global peers, thanks to increased participation from the domestic investors, who are pumping in money in the local stocks through SIP (systematic investment plan) and direct investments." The BSE Sensex is holding above the 73,000 mark, while NSE's Nifty50 is just shy away from kissing 22,300-levels, delivering a return of 25% in the last one year. Even the broader market, the BSE midcap and the BSE smallcap index have surged 66% and 70% in the twelve-month period." BT. Break out the bubbly? "The 225-issue Nikkei stock average's buoyant performance continued Monday (yesterday), closing at 39,233.71 to set a new all-time closing high for the second consecutive trading day." "Last Thursday (22 Feb), the Nikkei reached 39,098.68, surpassing the previous all-time high of 38,957.44 marked in December 1989." JT. And yet, "Japan has unexpectedly fallen into a recession after its economy shrank for two quarters in a row. The country's gross domestic product (GDP) contracted by a worse-than-expected 0.4% in the last three months of 2023, compared to a year earlier. It came after the economy shrank by 3.3% in the previous quarter." BBC. Clearly, a booming stock market is not a reflection of the economy. "As a recent Bloomberg news report pointed out: 'In 2023, Indian investors traded more [options contracts] than anywhere else in the world.' Retail investors make up for 35% of these trades." "Data from the Securities and Exchange Board of India shows that 90% of investors lose money while trading options and other derivatives," wrote Vivek Kaul. "Parent Whirlpool Corporation sold its 24% stake in the company on February 20." Whirlpool is trading at 66.23 times its forward 12-month earnings with no visible recovery in growth." "Another example is Linolux Limited, the promoter of Eureka Forbes, which sold more than a 10% stake in the Indian company." "Eureka Forbes has a price-earnings multiple of 103x, expensive compared to its peers." MC. People are gambling with their money because of FOMO (fear of missing out) which is "caused by feelings of anxiety around the idea that an exciting experience or important opportunity is being missed or taken away." TechTarget. There is more to come. "India's inclusion in the JP Morgan Government Bond Index-Emerging Markets Global Diversified will happen in June 2024...could lead to inflows of $20-25 billion into the country over a year." However, redemption pressure could lead to 'herd effect'. "What started with just a few investors can end with almost all investors stampeding to the exit at the same time." Mint. While Indians see FOMO, foreigners smell profits. The rupee has strengthened to 82.88 against the dollar. xe.com. Sell at enormous prices and convert to dollars at favorable rates. Double action profits.