Diwali, the festival of lights, is here but do we see a pall of gloom with the BSE Sensex crashing more than 50 percent since January 2008?

Things have come to such a pass that some people have simply stopped looking at their portfolios. They think it’s too late now to cut losses.

“I have now lost faith in long-term investment, I wish I had booked profits in January when my portfolio had doubled,” says my friend Vikrant, who works for a leading business newspaper in New Delhi.

The tumble over the past 8-9 months had forced Vikrant to postpone plans to buy a new car, and when he finally bought one, he preferred a loan from his father rather than a bank loan at 14 per cent.

When I joined college, many had warned me to stay away from the stock market calling it a dangerous place, thanks to the scams by Harshad Mehta and Ketan Parekh.

I agreed then, although more out of respect, and I was more than willing to dump such talk along with my boring History textbooks.

But the events of 2008, with the credit contagion spreading to stock markets across the globe, have made me sit up and take notice.

January 2008 when the BSE Sensex scaled a peak of 21K seems a distant mirage. Just as the investors and the Indian media were eyeing 25,000 as the next target, the benchmark index has plunged to sub-9000 levels in less than 10 months (197 trading sessions to be precise) — something many of us never imagined. At least I didn’t.

“It is extremely risky to work in this sector now, the company is losing business everyday as investors are panicking,” said a sales specialist at a Delhi stock brokerage who did not want to be identified.

He is looking for a new job, this time in a different sector, after seeing the firm’s cost-cutting initiative render his colleague jobless.

But is the crash affecting life beyond the Sensex?

During the weekend, local shopping malls and markets which are usually chock-a-block with customers completing their Diwali shopping have seen less business as the urban Indian is spending less.

“The middle-class consumer is in a bad shape; nobody is in a festive mood to celebrate and buy gifts,” said Deepak Gupta, a gift shop owner in Delhi.

Gupta says he has lost around 60 percent of his Diwali business this year due to the market crash.

For his part, Gupta, has switched from costlier dry fruits to a comparatively cheaper option of a regular pack of sweets as gifts to friends.

The Bombay stock exchange opens for an hour every Diwali. Records show that the Sensex has slipped only once (2007) in the last three years during this special session.

Given the current negative sentiment in the markets, I wonder how our benchmark index will behave on Diwali.

With each passing day it’s getting tougher to guess the bottom, and for those who have heavily invested, the phrase ’stock market’ is no less than a nightmare.

But what we should do?

We always knew losses are a part of this game, and hence, we can only be patient and learn from our mistakes.

Remember, there is hardly anyone the market has spared, and maybe you can try to take a break from checking your portfolios during this festive season.

If you are invested or are currently buying in this market, this tip from investment guru Warren Buffet might come in handy — “I never attempt to make money on the stock market. I buy on the assumption that they could close the market the next day and not reopen it for five years.”

I just hope things get better in the next five years. Actually, I can only hope. What about you?