After the benchmark BSE-Sensex flirted with the 30,000 mark, the markets have been giving signs of fatigue. In the last three weeks alone markets have fallen by about 5%. The investing community is rife with discussions of an impending stock market correction. 'How steep will the correction be? Will the markets fall down to the 25k level, or even further? Is this a good time to book profits and wait to buy again at lower levels?'
In our view, these questions are petty and typical of the short term trader. Long term investors should not pay much heed to them. In fact, long term investors should keep looking forward to corrections that throw up great investing opportunities.
So this is not the time to panic, but to be prepared to grasp investment opportunities when they seem attractive. It is with this mindset that one can be in a position to ask the right big picture questions.
What is it that differentiates India from the rest of the world? What makes India a hot long term investment destination?
So today, before the markets commence business again in sometime, we would like you to chew on this particular thought.
Remember, the world, at large, is grappling with an ageing population, unprecedented levels of debt and slowing demand. These are long term structural problems that are difficult to solve.
India, on the other hand, does not have most of these problems. India has the biggest pool of youth population in the world which is set to grow even further in the coming years.
One may raise concerns about the slowdown in the economy. In our view, the slowdown has been a largely cyclical phenomenon which got escalated by supply side issues and inflation. Long term demand remains robust given the huge working population and rising middle class. So the key structural factors appear to be in India's favour. How we unlock the economic potential is up to us...
In conclusion, the point of this little piece is to steer your focus back to long term considerations and not to what's going to happen to stock prices today, tomorrow or the day after...
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