'Investors: Stay Calm. Avoid Speculative Investment Behaviour'

'My advice: Don't mark your portfolio to market every day. Focus on survival.'

Global equity markets are in a state of upheaval, and the panic is spreading rapidly.

Following a steep Black Friday fall in the global indices, the Indian benchmarks -- Nifty 50 and Sensex -- too are witnessing a bloodbath, as panic grips global investors.

In this candid interview with Prasanna D Zore/Rediff.com, seasoned market expert Deven Choksey, managing director of wealth management and investment advisory firm Deven Choksey, dissects the mechanics of the ongoing meltdown, the implications for India, and what retail investors should -- and should not -- do.

From collateral damage to currency volatility, from strategic calm to sector-neutral investing, this is a deep dive into how the world's financial heartbeat is faltering -- and what it means for an economy like India's that's resilient, but not immune.

Global markets are undergoing a bloodbath. What is the primary concern causing this widespread panic?

I believe the major issue today is the weakening of the US dollar. Investors who moved capital into the dollar now face the challenge of protecting their portfolios against this depreciation. This is one of the root causes of the current turmoil.

As a result, people are selling futures contracts and hedging their positions. The currency, at this point, seems to be out of control, and a weaker dollar appears inevitable today.

Would you classify this as panic selling?

Yes, it is certainly panic selling -- but with a reason. The decline in the dollar has led to forced portfolio protection, resulting in panic selling by US and global investors. While the actions are emotional, they are still rational responses to a deteriorating situation.

How long before sanity returns to global equity markets? What factors could restore stability?

That's a tough question. Consider that the US market alone has a $55 trillion market cap. A 10% correction would wipe out $5.5 trillion, which can cause massive collateral damage. Banks that have lent to funds operating in these markets will demand mark-to-market recovery. This creates a domino effect.

The magnitude is so large that we cannot even fully comprehend it. And when forced selling occurs, investors liquidate assets across geographies -- India included.

Specifically, what challenges does India face beyond equities -- especially with US tariffs becoming real and China retaliating?

India's economy remains resilient and is not fundamentally in trouble. The main concern will be currency volatility.

When investors face mark-to-market losses in both currency and securities, they resort to asset sales elsewhere to meet collateral demands.

Fortunately, India has already experienced selling over the last six months, which may cushion further impact. However, collateral damage has unpredictable reach.

Could India see a proportionate impact if 10% of US market cap gets wiped out?

Not just India, but global markets will feel the pressure. For India, the key is not direct exposure (to equities), but indirect fallout from global fund movements.

When forced redemptions happen, they don't spare geographies.

What advice would you give to Indian investors right now?

At this moment, there isn't much of a choice. You can't panic.

India is largely an inward-looking economy and relatively shock-resistant. But you can't avoid collateral damage when others are forced to sell.

My advice: Don't mark your portfolio to market every day. Focus on survival. Let the storm pass.

How far could this correction go in Indian markets: Another 10% to 15%?

That's a speculative question. Right now, selling pressure is largely from global investors. They may have already offloaded most of their positions. We don't know whether further selling will follow. It's best not to speculate and escalate panic.

Has this market meltdown changed the way Indian stocks -- especially exporters and global-facing companies -- are valued?

I don't believe the fundamentals of Indian companies have changed. Most manufacturing businesses haven't altered their core operations. India isn't overly reliant on exports.

Pharma, for example, will continue to see global demand. Relative industries like textiles may face challenges due to sudden tariff hikes, but that's temporary.

For critical sectors like auto components, demand remains robust. So, no, we're not seeing a fundamental reset.

What should retail investors do now -- rebalance to debt, stick to large-caps, or stay long in equities?

First, stay calm. Avoid speculative investment behaviour. Individual, high-quality stocks are not fundamentally broken. But this is not the time to average down on small and mid-caps -- stay away from those. Let the dust settle.

Which sectors should investors accumulate, and which ones should they avoid?

I don't recommend sector-based investing right now. Every sector has outliers and underperformers. Focus on individual companies with strong fundamentals instead of chasing sector trends.

Beyond dollar stability, what other macro or policy signals could calm the markets?

First, stabilising the dollar is crucial.

Second, the US might attempt to reconcile its stance by negotiating with industries and finding a middle ground. It's possible that not all announced measures will be implemented as-is. That could bring relief.

Is this the moment for India to accelerate domestic manufacturing and look further inward?

We're already doing that. But accelerating further isn't as easy as pressing a pedal. Businesses will wait to assess the environment before committing to new investments. Sectors like power, renewable energy, and core infrastructure will continue steadily. But large-scale consumer product investments may pause until confidence returns.

With the rupee strengthening and crude prices falling, is this a net positive for India?

Yes, to an extent. India has historically imported inflation through rising commodity prices. Now, with crude cooling and the dollar weakening, inflationary pressure could ease. However, the bigger concern is the currency movement and potential collateral damage -- not domestic industry performance.

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