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Wednesday, 10 February 2016


Another meaning for the word panic is anxiety. It is one of the most dreaded word these days. And now even the pink papers and our media savvy analysts are using it so loosely these days. “ There is panic in global equity markets”, “Investors are panicking”. “ Stock markets have a panic start”  blah… blah….  Are bhai theek hai…… India is not having a panic attack. We are just reacting to what other economies are going through. And this reaction is due to liquidity issues faced by FIIs and various other global systematic risk factors.

Panic is an overwhelming feeling of acute anxiety. Anybody going through this would be either depressed or aggressive; it can be anything which defines unsettling or volatile behavior. So our stock markets are going through this. Our global economy is reacting like a human body, a single twitch in any part of the body gives a feeling of a heart attack or nervous breakdown. Looking at oil prices everyday is just like checking your pulse every five minutes to see if your heart is still pumping. Waiting for US Fed rate hike is like getting your ECG done every quarter. So what do we do? Waiting for new symptom everyday will not help?  So let’s first accept the fact that the global stock markets are having a panic attack. This is just a symptom that there is something wrong with our world economy. Every major economy right from US to China, Japan to Brazil are trying to set things right for whatever excesses they have committed before 2008. Without this mayhem governments and central banks all over the world would not have recognized the importance of stringent and transparent regulations. Even our own banking sector is on the mend and would have to go through the clean up session to emerge stronger and make our economy even more resilient.

As for retail investors, this panic attack is a blessing in disguise. Accumulating fundamentally strong companies at cheap valuations will help investors in attaining long term profitable portfolios.  India being fundamentally strong economy should just stay clam and wait for the parliament session to start, budget to be presented and other important bills to be passed as only fundamentals create wealth.

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