The Volatility of the BSE Market

With investors now seeking returns in emerging economies and with India emerging as the second fastest developing economy in the world, foreign investors' count has increased like never before. FIIs looking for investment opportunities find the Indian markets very lucrative; this is evident in the inflow of foreign funds resulting in the sensex touching 20,893 points, its highest ever, surpassing the earlier highest close of 20,873 points recorded on January 8, 2008. Well, the regular uptrend is not what the sensex index always displays. After much hype being created, the BSE sensex declined sharply once again by 848 points. This temporary fall is because of all-round selling led by realty, banking, PSU and metal sectors owing to weak industrial output data.

Another reason of the BSE sensex slide is because of a plunge in the Chinese market owing to growing conjecture of yet another interest rate hike by its apex bank. If demand in China loosens, then Asian exports including Indian exports are expected to suffer, thus resulting in the sensex downslide. There are more reasons put forward by market analysts for the fall of the sensex index. Another group claims it to be a knee-jerk reaction to the behavior of markets abroad.

Volatility rules every now and then; but yes, the downtrend witnessed is negligible. It is natural for novice investors to panic and get excited with the rise and fall of the BSE sensex. Wise and expert investors do not panic. The temporary downslide is because of short term market factors. Yes, market analysts have also predicted of the sensex index to cross the all time high recently exhibited in no time.

If you read financial news, and compare the industrial growth trend compared to a year ago, you will find a great difference. The present market is surely at an upscale. During September 2009, slowdown was 8.2 per cent and in the current September, it is 4.4 per cent.

Follow set rules based on the market trends. As novice investors, you should be able to endure well enough the amount of loss incurred.