Market Turbulence: Should You Stay Invested or Make a Move?

What are the main reasons behind the current market decline? After the market has fallen sharply in a brief period of time, market participants, brokers, commentators, and editors - like me - are able to invent reasons. The primary reason which has been cited in the context of this big fall is that the Federal Reserve decided not to cut rates. It is very confident about the outlook for the economy. Besides that, crude oil prices and uncertainty around the new presidency in the US, which can have implications for the domestic market, are also factors. But my sense is that except for the fact that foreign investors were pulling out money from a bunch of stocks, and a good part of the Indian market might not be very cheap - I can't say very expensive, but it may not be very cheap - this led to the big decline. However, I don't see a significant reason why the Indian market will go into a tailspin. I do not visualise a situation like October 2008, when the market fell by 10 per cent and then fell by another 10 per cent. We are not facing any calamity. Things look reasonably good. Some companies are not so cheap, and many companies have not given any meaningful return. When I look at some of the large companies in the domestic arena and the kind of companies that have been getting money in the domestic market, they are completely different from the bunch of stocks where foreign investors invest. That is why the domestic investors' experience of the market fall may be completely different from what we see in the broad market. The market fell about one and a quarter per cent, which was significant, but individual investors might have faced a much more severe decline if they held mutual funds or their own stock portfolios. Suggested read: How to deal with the stock crash? How have markets recovered from previous downturns? I can actually look back and analyse some major market downturns. After 1992, the Great Indian Scam led to a complete dist

This article was originally published on January 17, 2025.