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These 9 tenets of investing have and will always work in volatile markets

The market is your guru. Respect what the market tells you, understand the undercurrents. The idea is not to just beat the markets rather to preserve and protect your wealth and grow with the market.

January 31, 2021 / 09:53 AM IST

Stock markets can be irreverent and volatile. They can also be respectful to investors and hold the key to financial stability and growth. It is said that sometimes markets don't really create wealth for years and then suddenly in a short period of time, they create wealth that surpasses expectations. Something similar happened in the Indian markets recently when the benchmark Sensex crossed the 50,000-mark for the first time.

While the recent correction is turning investors overcautious, it has been a long journey for the Sensex from a base value of 124 in April 1979 to 50,000 in January 2021. The compounded annual growth over this 42-year period has been 15.9 percent.

From 1990, when it hit 1,000, the Sensex has witnessed a CAGR of 13.5 percent. However, as any stock market veteran will tell you, this journey has been long and arduous, checkered with volatility and intermittent losses that birthed from political instability, national security, economic slowdown, global events and stock market scams.

The benchmark's recent ascent underscores the true nature of stock markets. After tumbling to a low of 25,638 on March 24, 2020, the Sensex nearly doubled in approximately 207 sessions to cross the 50,000-mark.