The market is showing a palpable despondency. The cause is being overtly attributed to the sentiment related to tax law changes and treatment of the FPIs and the super-rich. This premise is more of an excuse.
Investing is a function of attractiveness of valuations and lure of growth. The fact remains that we have been liberal in the valuation of certain themes and displayed a tendency to overestimate growth. We are now realizing that mistake. And, the early birds are selling out very quickly. That velocity of sales in an illiquid market is collapsing many stocks.
The fear is that stocks will become even cheaper as more people sell. And, there is nobody on the other side to buy. But, there will always be buyers emerging when valuations reach attractive levels. Until then, this market reset will keep playing. For investors who did not invest aggressively into equities during the last cycle, millennials who are seeing their first bear market, and habitual high savers, this is a good time to get back aggressively into Indian equities.
As the structural factors affecting the economy change for the better, well thought out investment decisions made during tough times will always pay off. Applying oneself to the situation and opportunity on hand should be every investor’s top priority now.