Global markets in turmoil, screams the headlines. The reasons are China Market Meltdown, Greece, Plunging Oil Prices and Fed’s flip-flop on raising interest rates. I would like to ask few things :
1. How do these events affect India.
2. Are these events new? Are they not factored already in stock prices.
3. Is it a big decline yet?
Answers are :
1. Steep decline in oil prices have come as a boon to India. Our reserves have never been healthier due to reduced oil import bill.
2. These are quite old events and have been already factored in.
3. Not at all. It is just a 5% decline from all time highs.
Why are we then panicking?
This is how the market works. It induces fears in the minds of traders to make wrong decisions. It is quite normal for markets to decline by 5 to 10 % from the recent highs and yet when it happens it makes the front page news.
It is very much in the nature of stock market to go up and down. It is never a straight graph.
Stock Market trading is all about controlling your greed and fears. Don’t be afraid when the market goes down. This is the time to jump in. Time will soon come when they trade higher and higher, that will be the time to jump out.