Worrying about the stock market going down! So what should investors do?
Harsh Ranjan February 27,2025
If you have invested money in the stock market or mutual funds, then you must be seeing a huge decline in your deposits. The market is continuously falling. The important question is what should the common investors do? Should we withdraw the money at a loss? Should we stay in the market? Should we increase our investment in the cheap market?
India’s budget is about Rs 50 lakh crore. One eighth of this, that is, more than Rs 6 lakh crore, has been lost by the investors of Bombay Stock Exchange in the last few weeks. The market capitalization of BSE, which had been more than Rs 400 lakh crore, has now fallen to around Rs 396 lakh crore. On September 27, 2024, the BSE Sensex reached its historic high of 85,978, which is now trading around 74,600. That is, the Sensex saw a massive decline of 14 percent from its highest level within just four-five months. The same is the case with the National Stock Exchange’s Nifty. An average investment of Rs 1 lakh by a common investor has reduced by around Rs 15 to 20 thousand.
First, let us understand the main reasons behind the decline in the market.
Exodus of foreign investors
Foreign institutional investors are exiting the Indian stock markets aggressively. Their exit has led to a sharp decline in liquidity, making it difficult for the markets to bounce back. Also, in this environment of selling, common investors have also started selling their shares in panic.
Weak corporate earnings
Many big companies have reported lower-than-expected earnings, leading to a decline in their stock prices.
Global environment is adding to the pain
Trump’s aggressive decisions have shaken the global markets. US President Donald Trump’s aggressive stance on trade policies, tariffs and foreign relations has created uncertainty, which has affected stock markets around the world.
Trump’s recent moves on import duties and geopolitical strategies have made investors nervous.
China’s revival is pulling investors
China, which was struggling due to the COVID-related economic slowdown, is now showing signs of improvement. FIIs, who are always looking for better returns, are now shifting their money from India to China, as they believe that China has the potential for greater profits.
US Federal Reserve’s strict policy
The US Federal Reserve has kept interest rates high to tackle inflation, making US bonds more attractive. As a result, FIIs are shifting their money from India to the US at higher interest rates.
SIP investors’ confidence shaken
SIP investors, who once enjoyed stable returns, are now bearing the brunt of the downturn. SIP inflows have fallen significantly in recent weeks. Many are either holding their investments or redeeming their funds prematurely for fear of further losses.
What should a common investor do?
According to experts, you should stay in the market.
Stay invested and think long-term – Markets move in cycles. What goes down will eventually go up. If you have good stocks or mutual funds, hold on to them.
Avoid lump-sum investments right now – Instead of investing large amounts in the market, continue with SIPs or phased investments to average out the cost.
Diversify your portfolio – If your portfolio is heavily dependent on equities, consider balancing it with bonds, gold or other safe-haven assets.
Look for buying opportunities – When the market is down, quality stocks become cheaper. Smart investors use such times to accumulate good stocks for long-term gains.
Conclusion: Patience is the key
The current market crash may be dampening your investment morale, but it is not permanent. History has shown that markets always recover. India’s growth story remains strong. Instead of reacting emotionally, ordinary investors should be patient and wait for the situation to change. After all, the best profits often come to those who stand their ground even in times of turmoil.
