Now that the Brexit has happened and the world markets bleeding, we need to see how it can impact Indian markets.
In the short term there will be volatility and even sectors having exposure to EU would have some weakness. But the stronger companies with good fundamentals will recover. Perform much better hence giving the value Investor a better price.
In the long term, this is great news for India now that UK is out of EU the bargaining power of UK and EU would be dented significantly in any bilateral agreements between India and EU/UK be it in FTA (free trade agreements) or any other such negotiations. India by its sheer size would make it the most sort partner for there growth. It would be a win-win for both UK and India as trades bolsters.
Next major issue would be how UK fares post exit, if it starts doing well it would force other powerful countries in EU barring Germany will also look at there options to stay or exit. The sole existence of EU will also be in jeopardy. This issue might come up only after 2020.
Will it be another 2008?
There are fears that this event would lead to an event similar to 2008 but i doubt any such event would happen because the economies are the same, people are the same, corporations are the same, above all UK has time till 2018 by then they would sign agreements with most EU nations so that there is no significant impact. EU was more a political union with economic interests and not the other way around. A major jolt will happen only if the entire EU disintegrates, which we don’t foresee in near future.
What an average retail investor should do?
Go on a value hunting spree and buy stocks with good fundamentals but beaten down because of this temporary event as SIPs. Also in the near term can look at the consumer driven stories in India boosting due to good monsoon(its an expectation with a good start till now). Passage of GST is round the corner and can look at sectors which have direct impact with this as well.