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What to do in this crash?

The current crash will prove to be a perfect example. In the short run, markets get influenced by global or other extraneous factors. However, in the medium to long run, the only thing that matters is the state of the local economy. The Indian economy is clearly in a steady recovery mode. The indicators are many. Inflation is down and interest rates will follow. Macroeconomic indicators are gaining health, with the current account deficit almost gone and the fiscal deficit in control. We are one of the few emerging market economies that actually benefit sharply from the fall in the commodity prices that is accompanying the crash. Today, we have one the best growth trajectories in the world.

In the medium-term, this is what will decide the direction of our stock markets. You might hear a lot of discussions about whether this crash is a buying opportunity or not. The answer is that in a growing economy, it is always a buying opportunity. A steady, systematic investment strategy was the right one a decade ago, a year ago, and a week ago, and so it is today, and so it will remain for the foreseeable future.

wrote Dhirendra Kumar

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