Fears over global growth, particularly in China, political uncertainty in Greece and the potential for rising interest rates in the U.S. look to have spooked markets.
Investors should put the recent volatility in context:
- Including Monday’s decline, the Sensex fell 2137 points over the last week. This fall represents an intra-year decline of 13%.
- However, intra-year declines of 13% or worse are not unusual at all. Over the last 35 years, markets have typically on average experienced a 22% intra-year decline; however, in 26 of the last 35 years, the markets then rallied to finish up on the year.
- As the chart below shows, this sell-off is roughly in line with previous historical sell-offs.
