Why are Markets Choppy?

07-11-2024 • 20 mins

In this episode, Monika explains why Indian stock markets, after a four-year bull run, are now experiencing choppy waters. She discusses how markets sometimes grow ahead of the economy’s fundamentals, leading to short-term volatility. She highlights that while Sensex has returned a remarkable 23% per year over the last four years, long-term averages show more moderate returns. Investors should prepare for lower returns in the near future, possibly high single digits or low double digits, aligning with historical averages.

Monika also examines the role of Foreign Institutional Investors (FIIs) in recent market fluctuations. FIIs withdrew over Rs 88,000 crore from Indian equities in October 2024, partly to rebalance portfolios and shift funds back to the US amid election uncertainties. However, she notes that strong domestic investments through mutual funds and retirement accounts have cushioned the impact, preventing a larger market drop. Monika advises investors to stay focused on asset allocation rather than reacting to short-term FII moves.

The episode also addresses estate planning, with Monika stressing the importance of preparing an efficient asset handover. She recommends essential steps, like naming nominees on all financial accounts, keeping property documents accessible, and writing a registered will. By organizing assets now, families can avoid unnecessary stress and financial setbacks later on.

In listener queries, Richa Kukreja, a single working woman, seeks guidance on building a retirement corpus of INR 5 crore by age 60 through mutual funds. Sahil Kapoor from Dallas asks about tracking mutual fund returns and whether XIRR or annualized returns are more effective for this purpose. Lastly, Vidya, nearing retirement, shares her concerns about protecting her investments amidst global uncertainties and the potential impact on her mutual fund portfolio.

Chapters:

(0:41 - 5:01) Why Are Indian Markets Choppy? Understanding the Current Market Pullback

(5:02 - 7:06) Dealing with Death: Estate Planning and Asset Handover

(7:10 - 10:46) Building a Retirement Corpus with SIPs

(10:48 - 15:59) Annualized Returns

(16:02 - 18:58) Protecting Investments in Uncertain Global Events

https://www.amazon.in/Factfulness-Reasons-Wrong-Things-Better/dp/1473637465

If you have financial questions that you’d like answers for, please email us at ⁠mailme@monikahalan.com⁠

Monika’s book on basic money management

www.monikahalan.com/lets-talk-money-english/⁠

Monika’s book on mutual funds

⁠www.monikahalan.com/lets-talk-mutual-funds/⁠