New Delhi: The sharp fall in the stock market has dealt a huge blow to investors’ wealth in just two days. According to the latest data, the market value of about Rs 11 lakh crore has decreased, which has especially affected the portfolio of those investing through SIP (Systematic Investment Plan). This decline has been recorded in the Indian equity markets in an environment of global uncertainty, high interest rates and weak economic signals.
What was the reason for the sudden decline?
Amid sharp fluctuations in the market, both the major indices Nifty and Sensex opened with a weak start and remained under pressure throughout the session. Continuous selling was seen in many sectors, which had the biggest impact on midcap and smallcap stocks. According to experts, factors like concerns about inflation, uncertainty in the global economy and capital withdrawal by foreign investors together weakened the market sentiment, due to which the decline deepened.
How did SIP affect investors?
SIP is considered to be a safe and stable way for long term investments, but the recent sharply declining market conditions have reduced the portfolio value of many investors. According to experts, small investors who were more focused on equity are facing the biggest impact of this decline. According to some investors, the value of their SIP funds has declined by several percent, making the current state of their investments appear untenable.
What is the opinion of market experts?
Market experts say that the current decline should not be seen as a situation of panic. According to him, this fluctuation could be related to short-term reasons and long-term investors should not make hasty changes in their strategy. Experts are advising that it may be wise to continue SIP regularly as the installments made during market downturns help in reducing the average cost. He believes that with time when the market stabilizes, investors who are patient can get better returns.
What are the possible reasons for the decline?
Analysts say that the decline in the market has happened due to many reasons. Prominent among these are:
Rising global interest rates and inflationary pressure
Foreign capital withdrawal
Signs related to decline in profits of companies
Slowdown in domestic manufacturing and consumer demand
All these factors together have created instability in the minds of investors and this has led to rapid selling in the market.
What advice for investors?
Finance experts believe that investors should avoid panic selling at such times. SIP should be taken as a long term investment, as the market may recover with time. Also, investors should keep their portfolio balanced and take investment decisions according to risk.
