Stay invested,market slide short-term: experts

United We Fall--Sensex today tumbled due to a sharp fall in world markets. But investors will do better to stay invested given the countrys potential to grow at 9%

A 702-point or 4 per cent intra-day plunge in the Sensex the benchmark index of the Bombay Stock Exchange on Friday came as a big dampener to the already fragile investor sentiment and refreshed memories of the global financial crisis in 2008. But instead of pressing the panic button,investors are definitely better off using it as an opportunity to invest for the long term,say experts.

The Sensex plunged on the back of a 4.3 per cent decline in the US markets as concerns rose over a weakening US economy and debt levels of Italy and Spain. It recovered intra-day and finally ended with a drop of 387 points or 2.2 per cent at 17,305.9 hitting a 13 month low.

While the Indian markets were the fastest to recover after the global financial crisis and rose from a low of 8,160 in March 2009 to close at a high of 21,004 on November 5,2010,the market movement since then has been rocked by a series of scams (2G,Adarsh,CWG),high inflation and high interest rate environment other than the global debt worries. It has fallen by 17.6 per cent since then and inflation and interest rate concerns are still there after 11 repo rate hikes by the RBI in last 17 months.

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But market players remain optimistic. There are global worries and then there are problems of inflation in the Indian economy but they are getting priced in into the market everyday and as when there will be a trigger of improvement,we will see an upward movement, said Nilesh Shah,president Corporate Banking,Axis bank. Every correction provides the investor a good opportunity to enter the market.

Others say that the economic fundamentals and high GDP growth rate of around 8 per cent should be kept at the back of the mind before making panic decisions of selling existing investments in a choppy market. From an investors point of view there is nothing to panic and the current fall is a result of international sentiment impact as the markets are integrated, said Abhay Aima,head of equities and private banking at HDFC Bank. It makes sense to invest in the medium to long term at these levels since the valuations look attractive for an economy that will grow above 7 per cent or 8 per cent.

Market players also say that the reasons for the Indian market fall is more sympathetic in nature rather than structural since the markets are not insulated from global factors. If the outlook is that commodity prices and interest rates should begin to drop,then it reinforces the case to accumulate Indian equities rather than abandon it, said Sanjay Sinha,CEO,L&T Mutual Fund.

While the slide in equities has dampened investor sentiments,a lot of retail investor money is following fixed deposits and debt products offering higher returns. Experts,however,caution that money meant for equity allocation should not be invested into debt.

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