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23 Jan 2020 by Harsh Ashar
Are You Exiting Your Investments in the Stock Market in India Prematurely?

My earliest memories of a roller-coaster go back to my school time when I went on a school trip to an amusement park here in Mumbai. After finishing some necessary not very exciting rides when I reached the roller-coaster, I was raring to get on it. Waiting in the long queue for my turn along with hordes of my classmates seemed endless. The shouts of those seated in the moving roller-coaster with hands raised in the air only added to my excitement.

Finally, when my turn arrived, it was altogether a different story. As the roller-coaster picked up speed, I started feeling giddy, had butterflies in my stomach and felt like puking. The joy ride soon turned to horror with no end at sight. I closed my eyes and at times even felt like jumping off when the roller-coaster reached its lowest point to end my plight. While others around me were enjoying, I felt terrible. Thankfully the ride ended after three minutes which seemed to me like ages.

Like a roller-coaster which takes unexpected turns and twists, the stock markets in India are also subject to unforeseen ups and downs. I never sat on a roller-coaster again in my life. But years later, I still see many investors reacting the same way I responded during that three-minute journey on the roller-coaster.

At the first sign of market correction, I see many investors panicking and selling off their investments for a loss like there is no tomorrow. As a 10-year-old, my thought of jumping off the roller-coaster when it was near the ground was indeed dangerous because it was still moving fast. But I was a kid back then, and I guess it is okay for very young kids to think irrationally. What surprises me is grown-up investors acting irrationally during a correctional phase of the market even if they have invested in good stocks.

Now, these are the same investors who come back to invest in the stock market in India when the cycle changes or quit altogether and blame the market for their losses.


Stock market in India is volatile, but why worry when you have invested in good companies


One look at the below graph and you can see that the trajectory of Nifty is very much like that of a roller-coaster with a lot of ups and downs.

Emotions are an investor’s greatest enemy

As humans, we have all emotions. And fear is one of them. However, it is crucial for every investor who invests in equities to understand that there is no way markets can go continuously up in straight line.

There will be many temporary hurdles while investing in the stock market in India in the short term. But if you look at past, irrespective of whether it is India or global markets after every downturn, the stock market in India has rebounded after some time in a big way. Read more about why you should not try to time the market here.

Instead of looking at stock market corrections negatively, consider it as opportunity to accumulate more of good quality stocks available at bargain prices. Know why?

So when you invest for the long term, the returns will average out. The secret to becoming a successful investor is to remain invested during the volatility, just like holding tight while on a roller coaster ride.

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