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Treat this correction well
Mon, 24 May Pre-Open

The Indian markets have faced turbulence in the past three weeks. And not much respite seems on the horizon. Some snap reactions might though be in the offing. One positive reaction could be for the truce between the Ambani brothers. Also, more positive surprises from Indian companies through their good March quarter performance cannot be ruled out.

However, the darkest cloud covering investors' sentiment - Euro crisis - remains in its full glory. And we see it continuing to be the deciding factor in the way markets move over the next few days. After all, the magnitude of the Euro crisis is huge and widespread. Thing are not looking too bright in the US as well, as we saw from the recent rise in the country's unemployment rate. A falling inflation in the US also speaks volumes about the slackness in consumer spending, which is counted as a factor that can take the US economy out of the slump.

In all, most of the concerns impacting Indian markets are foreign in nature. Of course, domestic concerns remain in the form of high inflation and stock market overvaluation. But do not expect these to be significant factors impacting the long term direction of the Indian economy.

As we quoted in a recent issue of the 5 Minute Wrapup, emerging markets like India present themselves as the best bet in times of the global economic uncertainty. Expert emerging market investors like Mark Mobius in fact find less risk and better return in emerging markets. And India is no exception.

Long term investors would do themselves a world of good by sticking to quality companies for 5 to 10 years. Looking at any correction as simply a 'price action' and not as 'value destruction' would be the key here. Given India's domestic demand led economy, any correction in asset prices emanating from the developed world would only provide investors to buy good companies at reasonable prices.

For information on how to pick stocks that have the potential to deliver big returns, download our special report now!

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