Impact of Global Events on Portfolios

Published on August 23, 2024 | By Vishnu P

Understanding the Impact of Global Events on Portfolio Performance in the Indian Market.

At Haveten, we're all about understanding the big picture. We know that global events, especially economic crises, can really shake things up in the world of investment. In this blog, we're going to take a closer look at how these events impact portfolios, with a special focus on the Indian market.

The 2008 Financial Crisis: A Rough Ride for India's Market Back in 2008, a big financial crisis hit the world. It started with the collapse of major financial institutions in the United States, and its effects were felt all the way in India. The BSE Sensex, which is a big stock index in India, dropped by about 60% from its highest point in January 2008 to its lowest point in March 2009. During the 2008 financial crisis, Indian equities took a big hit. The BSE Sensex saw some sharp drops as investors got scared of a global recession.

Geopolitical Tensions: A Global Game of Chess Geopolitical tensions are like a high-stakes game of chess played on a global scale. When two countries are at odds, it can cause a ripple effect that impacts markets around the world. For a country like India, which is heavily involved in international trade, these ripples can turn into waves.

Case Study: The India-China Border Conflict In 2020, a conflict flared up between India and China along their disputed border. This conflict led to a lot of uncertainty in market. The BSE Sensex, a major stock index in India, experienced a lot of ups and downs as investors tried to make sense of the situation. During the peak of the tensions in June 2020, the BSE Sensex fell by over 6%. This drop shows how geopolitical tensions can lead to uncertainty in the market.

The Ripple Effect: Geopolitical Tensions and the Indian Economy Geopolitical tensions can have far-reaching effects on the Indian economy. For example, during the Israel-Palestine conflict, crude oil prices increased by about 5%. If crude oil prices continue to rise, it could have a significant impact on the Indian economy. Higher oil prices can lead to increased fuel prices, which can result in inflationary pressures.

The COVID-19 Pandemic: A Storm Hits India’s Economy In 2020, the world was hit by the COVID-19 pandemic, and it was like a big storm that shook up everything, including India’s economy. The BSE Sensex, which is a big stock index in India, had a wild ride. It dropped by about 38% from its highest point in January 2020 to its lowest point in March 2020. The Nifty 50, another important stock index in India, had its biggest drop in over a decade in the first three months of 2020. This shows just how much the pandemic impacted Indian stocks.

Strategies for Success: Navigating Through Rough Waters Even when things get tough, investors in the Indian market can use certain strategies to navigate through the rough waters:
Diversification: This is like not putting all your eggs in one basket. By spreading investments across different types of assets, sectors, and regions, investors can reduce risk and lessen losses when the market in India goes down.
Active Risk Management: This involves using strategies like setting stop-loss orders and keeping some cash on hand to protect your money during times of market volatility.
Stay Informed and Adaptive: It’s important to keep up with global events and understand how they impact the Indian market. By keeping an eye on economic indicators, geopolitical developments, and market trends, investors can adjust their strategies as needed.

Conclusion: Riding the Waves with Haveten Investments At Haveten Investments, we understand that global events can have a big impact on portfolio performance in the Indian market. By learning from past crises, staying informed, and using smart strategies, investors can navigate through turbulent times and work towards their long-term financial goals in India.

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