NSE's Nifty index closed below 4,000 points yesterday, first time since the election result took it past that mark on May 18. The index is now down nearly 15% from its recent peak, shedding a large part of the gains made over the past couple of months.

The immediate trigger is obviously the budget, which apparently did not meet many of the streets expectations the securities transactions tax remained, no change in corporate tax rates and there was no big push to reforms.

Yet, given the economic backdrop, it is difficult to imagine what more the budget could have done. The overwhelming priority at this stage is reviving the economy, and the budget tries to do just that. The market had built up irrational expectations from the budget.

Those out of the way, the fundamentals or the renewed doubts about the global economy which have sent markets across the world in a tailspin have caught up with the Indian stock market. Crude oil has dropped below $60 a barrel, over 17% from its recent highs.

In London, the FTSE 100 is near its two-month low while US stocks have fallen for four straight weeks now. Many emerging markets are also down 10-15% from their recent peaks. A general flight to safety is evident in the demand for US government bonds and a strengthening of the dollar.

Such market swings, underpinned by bouts of optimism and unease, are on expected lines as the global economy tries to come out of the worst slump since the Great Depression. In the case of India, monsoons are an added concern.

Instead of being taken in by the tide of euphoria or bouts of pessimism, the gyrations should be seen as investment, and portfolio rebalancing opportunities, across asset classes. Rallies then become opportunities to book profits in shares that are unlikely to be the big gainers as global economy recovers, while corrections are a chance to buy the better ones.

Away from equities, with a likely return of inflation and decline in dollar with improved sentiment, gold is worth considering at todays low prices. For the same reason, perhaps long-term bonds would be a risky bet right now.

Lastly, there are commodities that many experts reckon have strong long-term fundamentals. Good time for a hard look at existing investments and asset allocation.