July Carnage in Indian Markets

What a July it has been for those of us who are invested in Indian markets.


Markets witnessed its worst July since 2002 with Nifty falling 5.7%.


The natural question that follows is.....Why?


The main reason for the fall is persistent selling by foreign investors who have pulled out more than Rs 16K crores from the cash segment in July.


Typically, market trades in the green in July but the higher tax surcharge for the Foreign Portfolio Investors (FPIs), poor to mixed corporate earnings are impacting us. Also globally, the Fed cut interest rates this week but the commentary signalled a hawkish stance of this not being first of many cuts. Global markets were also impacted by the escalation of US-China trade war.


Safety and Return don't go together!!

If you are a SIP investor investing for long-term, these short term hiccups should not bother you at all and in fact, such situations offer an opportunity for SIP investors to accumulate more units at lower prices.


Historic data supports the fact that in the long term, equity market investors have lost money on very few occasions.


If you would have invested for 10 years on any given day in the past (from April 1979 since when the data is available) in S&P BSE Sensex (assuming Sensex is a mutual fund), the chances of you losing money was only 1.04 per cent. On around 77% occasions, the return was greater than 10 per cent even in case of lump-sum investments.


People who are investing in stock markets are investing for the long term and such short-term gyrations shouldn't unnerve one. The long term growth story of India remains intact.

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