Correction in Market is Good Opportunity to Invest:V. Srivatsa

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Chandigarh 01^st February:- The fall in the markets is largely led by very weak global sentiments towards risk assets and most of the asset classes have taken a knock in the last quarter and the last year with very few assets classes delivering positive returns. China remains the driver of global GDP growth and especially the demand for global commodities where it drives large part of the incremental demand and the slowdown in china has impacted the commodity prices and has set a panic reaction amongst most emerging markets. India has been impacted by the huge negative sentiments towards emerging markets equities and has borne the impact in the last two to three quarters.

Crude prices historically have been an indicator of global demand and the sharp fall in the crude prices does give a very negative picture of the overall global demand and growth. From a macro perspective , India does benefit from falling crude given its huge imports and rising subsidy on fuels , however it is important to note that our inflows from the crude producing nations such as countries in Middle east is substantial in terms of remittances and investments by the sovereign wealth funds of middle east . Hence a very sharp fall in the crude prices is mixed for the Indian economy with a probable negative bias.

The initial set of results from IT, banking and consumer sector have been in line with expectations and there have no major surprises. Directionally the third quarter should be better as the full impact of the commodity prices would be felt in the resource companies and we should be seeing commodity user industries to see the full benefit of the commodity decline.

The last one year has been a trying time for the equity investors given the sharp fall in the markets and in these times , you tend to  lose confidence in the markets , however if we look at history , it suggests that staying invested and adding more in these times in equity is the right strategy and has given rich dividends.  We would advice to be patient and continue investing in the markets as equity is a long term value generator.