In my two decades of interacting with many investors, I have often noticed a curious paradox: we are remarkably patient while waiting for a sapling to grow into a tree or for a child to complete their education, yet we expect our financial portfolios to move in a straight line upward.
Recent market fluctuations—driven by global geopolitical shifts and changing economic narratives—have once again brought a familiar sense of unease to the dinner table. It is natural to feel anxious when headlines scream about “wiped-out wealth,” but as a seasoned participant in India’s growth story, I believe it is essential to look beyond the immediate noise and focus on the character of our markets.
The History of Resilience
Volatility is not a bug in the system; it is a feature of equity markets. If we look back at the history of the BSE Sensex, we see a pattern not of fragility, but of incredible resilience.
Consider the 1992 Harshad Mehta scam, when the Sensex plummeted by nearly 13% in a single day and lost significantly over the following year. Or the 2008 Global Financial Crisis, which saw the index drop by over 60% from its peak. More recently, in March 2020, the onset of the pandemic triggered a 13% single-day fall, leading to temporary trading halts.
While these moments felt like “the end” at the time, history shows that the Indian market has a remarkable habit of recovering and reaching new milestones. For instance, after the 2020 crash, the recovery was not just swift but led to an unprecedented rally over the next two years. Data suggests that over the last 35 to 40 years, despite numerous “black swan” events, the Sensex has delivered a compound annual growth rate (CAGR) in the range of 13% to 14%.
Behaviour Over Forecasts
The real risk to a long-term journey is often not market volatility, but investor behaviour. In times of stress, the temptation to “stop-loss” by exiting the market or pausing Systematic Investment Plans (SIPs) is high. However, doing so often converts a “notional loss” on paper into a “permanent loss” in reality.
Staying invested allows you to benefit from “Rupee Cost Averaging”—the process where your regular investments buy more units when prices are low. Over a decade or more, these “cheap” units often become the primary drivers of wealth creation.
As we navigate the current environment, remember that time spent in the market is far more critical than timing the market. The Indian economy continues to show structural strength, and for those with a horizon of 7 to 10 years, short-term turbulence is merely a footnote in a much larger success story.
Investments in mutual funds are subject to market risks; please read all scheme-related documents carefully. Past performance may or may not be sustained in the future and is not a guarantee of future results. Every investor’s situation is unique; therefore, one should consult their financial advisor before making any investment decisions to ensure alignment with their personal risk appetite and goals.