It isn’t right as rain with the current market. And that might be disconcerting for many of us who have invested money into stocks on a hope and prayer. The worst thing you could do in a falling market is engage in panic selling. Don’t do that.
I will enlist my thoughts on why you needn’t worry too much about the market.
The midcap index has been down the entire year. The midcap was down 20% and then starting October Sensex fell over 2000 points. Again the boiling trade war between US and China, China and US, US and Canada and other countries has markets worried sending it plummeting down.
But still the market was hanging. What did it under are the recent troubles with IL & FS. IL & FS has many allegations against it some true, others not. Primarily its assets are in trouble and the company is reeling under debt. Big fund houses like LIC have a 20% stake in the company.
The volatility we see now and have seen before inform part and parcel of markets. But given the sharp fall and the decline in rupee doesn’t bode well. That said, markets don’t always need a strong valid reason to recover just like it doesn’t need much to fall.
Investors are jittery about the market, limiting liquidity. If the market regains confidence then indices would start moving up in no time and the past levels will broach within no time.
Another long time problem that doesn’t seem to have an easy out is the NPA problem especially the exposure to public sector banks. The double whammy of infra and finance troubles is witness to larger problems within the economy.
Despite the current situation and despite what global fund houses are saying I am of the opinion that the market will recover soon. Already its above 35000 points.