The economy and markets are going through tough and testing times. At the beginning of this year, the Indian economy was in a Goldilocks setting with decent growth, low inflation and macro stability with declining fiscal and current account deficits. The conflict in West Asia and the consequent energy crisis has transformed the Indian economy’s macro construct from Goldilocks to vulnerable. The market has corrected. Nifty is down from the peak of 26358 to about 23600 on 20th May 2026: a price correction of about 10 percent. Investors, particularly those who entered the market after the COVID crash, are worried. Some have panicked and got out; some have even stopped SIPs.
Is there any need to be unduly worried?
What should be the ideal investment strategy?
Surprises are a constant in the market. Now, in this VUCA world, surprises are happening on the economic front, too. Technological change is a major factor. AI has emerged as a hugely transformational factor unleashing profound consequences. Markets are reflecting these changes. For example: the best performing market in 2025 was South Korea with an impressive 75 percent return in KOSPI. What is significant is the fact that more than 40 percent of this rally came from just two stocks – Samsung and SK Hynix. These two semiconductor giants have powered the rally in KOSPI in 2026, too. This year KOSPI is up 65 percent YTD as on 21st May. If we take the last one-year return, KOSPI is up by an incredible 202 percent. The power behind this massive bull run is the AI trade and the super normal profits which the semiconductor giants are making. There are reports that Samsung’s profits this year will be around $250 billion, making it the most profitable company in the world. These are mind-boggling numbers and the market is responding to that. But market experience is that no theme lasts long.
If we move from this short-term miracle in South Korea to the long-term returns, the picture completely changes. Sensex and KOSPI have almost similar base years – 1979 for Sensex and 1980 for KOSPI. And where are the indices now? KOSPI is at 7700 and Sensex is miles ahead at above 76000. In long-term returns, Sensex has hugely outperformed.
Therefore, investors should not be carried away by the short-term aberrations in the market. In these testing times for the economy and markets, investors have to be extremely patient. There have been many instances in the past where the returns have been poor, and the market delivered poor or no returns at all. During the 46 years of Sensex, returns were negative in fourteen years. Sensex was flat during a long nine-year period from 1994 to 2003. And then, in the five-year period from 2003 to 2007 Sensex multiplied six times giving incredible returns to investors. It is important to understand that only those investors who remained invested and continued to invest gained from this massive bull run. Tens of thousands of investors who panicked and got out of the market during crises didn’t benefit from the subsequent bull runs. Those who stopped SIPs also didn’t benefit. This is the market history. Therefore, remain invested and continue investing systematically with discipline. In brief, this is the time for patience and patience will be rewarded. Remember the famous words of Warren Buffet: “Stock market is a device for transferring money from the impatient to the patient.”
