The Indian stock markets have seen ups and downs since the start of 2019. The post-poll survey in May last week showed the return of the BJP-led government, causing Sensex and Nifty breach record levels. Naturally, the foreign portfolio investors (FPIs) were attracted, and they invested in significant numbers.
Fast forward July 2019, the Finance Minister of India amended increased surcharge on FPIs and super-rich. Also, there were no changes made in the taxation of capital assets. These things in unison with the economic slowdown and global factors have had adverse effects on the Indian capital market.
The FPIs have pressed the selling button. The FPI outflow from the Indian market is the highest among all emerging markets over the last three months. Sensex has crashed from the mark of 40,000 points to hover around 37,000 while Nifty has fallen from 12,000 to float around 11,000. Global factors currently overshadow the growth stimulus.
On 23 August, Nirmala Sitharaman, the Finance Minister of India, announced economic boosters. She withdrew increased surcharge on FPIs registered as trusts, eased credit policy, and announced the recapitalisation of public sector banks. This move came with a hope of improving the market sentiment, which leads to higher equity investments.
The Sino-American trade war has put the emerging markets into disarray. The slump in the Chinese yuan against the greenback has had its effect on the Indian rupee. But, you need to remember that markets won’t stay this way for a long time. Investors shouldn’t lose hope and hold onto their investment for some time.
When the markets are down, it marks the time to pump in more money. You can buy more units at a lower price. Your purchasing power increases when the markets have hit the bearish trend. This is good in the long-run as you would make good profits when the markets go bullish.
Market volatility is an integral part of the equity-linked investments. The only way in which you can beat volatility is by staying invested over a long-term. Long-term investments offer you the benefit of rupee cost averaging. Also, staying invested over a long-term is tax-efficient.
The current market conditions might look gloomy, but the investors shouldn’t panic and press the exit button. This is the time that you diversify and expand your portfolio as the stock prices have gone down. Running away with losses when you have the opportunity to make the most out of the bearish market is an unwise thing to do.
The investors who stay glued to their investment for quite some time will see the power of equity markets. Equity markets are for those who stay invested for at least three years. To get rich by investing in equity, you need to give your investments enough time. Equity investments are all about patience.
Engineer by qualification, financial writer by choice. I am always open to learning new things.