|
Indian Economy has seen the worst nightmares’ in the last calendar year. Notably, the citizens in a rare scenario have been able to remember the specific dates of the events. Be it the United Kingdom’s prospective withdrawal from the European Union, popularly known as “BREXIT” or the Demonetization of the select Indian Currencies or the Election of Donald Trump as the World’s most powerful person or the retaliation by the Indian armed forces in the form a surgical strike in the regions of PoK.
One of the leading indicators which depicted the immediate effect of these events is Stock Markets movement. The Indian Stock Markets reacted to all these dramatic events in the following days in a depressing manner reflecting the sentiments of the investors.
However to bring light to a fact, the effect of none of these events have actually lasted on stock markets for more than a fortnight except for demonetization.
It is very important to understand that macro event like the one that happened beyond the borders of the country (Br-exit) doesn’t hold much importance since the actual harm to the economy from these events is minimal. The event like this, damages only when the economy as a whole has a vested interest in that particular economy. Barring few sectors, none of the sectors of the economy is affected if the United Kingdom is voted out of European Union.
Rationally, none of the individual investors had to fear about the event.
In fact, Indian Markets gave a strong buying opportunity for the investors to enter the markets at Sensex levels as low as 26,400. Surprisingly, it took only a week for the market to recover to levels before BREXIT.
The next big event and OPPORTUNITY for the investors was demonetization announced by the Honorable Prime Minister of the country in the month of November. Following the announcement the markets showed a drastic correction falling to levels as low as 25,960 on 22, November 2016.
However investors again fell for the trap of negative sentiments and missed the opportunity for investing following the days of demonetization announcement. As a consequence, markets have showed tremendous response to “Re-monetization” activity which has begun in the economy and have taken the market to levels of 28,300 in a period of just 3 months, fueling almost 2500 points to markets.
The market regaining its early momentum is very positive news for all of us. Dips are bound to come and there is no escape to it. Every dip in the market is a buying opportunity and should make it work in his favor. One thing, a rational investor has to accept and understand is that investments are made for a long-term horizon. Wealth Creation happens only if the investor keeps a long-term perspective in mind before investing.
Nilesh Shah, MD of Kotak Mahindra Asset Management Company rightly said, “You could earn 1-year return of an FD in one day in equities”.
I hope this article would add value to every investor.
|