As the BSE and NSE are experiencing high fluctuations, many investor's are loosing their hard earned money. People, at every sharp decrease in the index, thought that it was the once a while opportunity to buy stocks at cheaper levels. I my self heard experts speaking on National Channels very highly about the cost effectiveness of stocks like SBI, JSW Steel, RIL etc, when sensex was hovering at a level of around 17500 levels. Markets lost more than 10 percent in a short period after that. Most people found themselves on the loosing side than on the gaining side. Even today people are expecting markets to go either way, some are expecting a further downturn while others are expecting an increase in share prices in the coming period. The billion dollar question is; What to do and what not to do.
It's of prime importance for an Investor to understand, how the market functions. Markets basically work on mainly three main factors which include the company, industry and Overall economic performance. While most of the top companies are able to perform well at the company level, they are finding it difficult to cancel out the effects of bearish industry and economic factors.
India was supposed to be safe from the present crisis in the European Markets as Its economy is still in the nascent stages of global economic connectivity; But as the Government and the industry in this country are still in the shock stage in the aftermath of 2G scam, the growth in the country has come to a standstill. India like country with so much growth potential due to its ever aspiring and growing no. of hard working people can grow at 6 % even without government supervision, so we can say that If the growth rate is closing around 6%,the government is not contributing even a single percent.
We can also conclude that the instead of contributing towards the economic development; The government is hurting the economy by encouraging corruption at the higher levels. I am not talking about small scale corruption, I am talking about corruption which is hurting the economy to the tune of lakhs of crore rupees every year. This makes a big hole the pocket of development.
International factor's are mainly driven by the sovereign debt crisis unfolding in the countries like Greece. Its impact over the global economy could have been avoided if the management of the crisis was done through an Internationally co-ordinated effort, But the European countries under the leadership of Germany and France took the sole responsibility to infuse more and more liquidity in the Greece Economy to help it avoid payment defaults. The need was not of infusing more and more loans in an already highly indebted and fledgling economy but assistance in the form of International aid. The infusion of liquidity was also needed to be assisted by the internal reforms in the Greece economy, which never became operational. Result a continuous strain on the markets around the world.
Investor's need to understand that stock markets functions totally in response to positive and negative sues. If the Investor feel that the company fundamentals are strong couples with positive Industry and economic outlook, they should invest; Otherwise, Its better to wait than to be sorry later.
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