In the last seven trading sessions, major benchmark indices have been highly volatile due to geopolitical tensions. Markets made a comeback on Friday, BSE Sensex closed with a gain of over 1,300 points and NSE Nifty closed above 16,600 points. However, global markets fell on Thursday amid reports of Russia starting a war with Ukraine. In the early afternoon, Russian President Vladimir Putin announced “special military action” in eastern Ukraine. The sudden development took the market participants by surprise and panic selling ensued. In India too, the broader Nifty 50 fell 4.8 per cent to 16,248, while the Sensex was trading 4.7 per cent lower at 54,530. India’s volatility index VIX closed 30.31 per cent higher at 31.98.
Experts believe that the market may remain volatile for some time. Should you also sell in a hurry to cut losses? Or, is there a better way to manage the situation, especially when the next few days are unpredictable?
Don’t panic in falling markets
Volatility is the inherent nature of stock markets. Historically too, markets have fallen in response to such situations – be it wars, pandemics, terrorist attacks, financial crises, scams or others – and then recovered. Roop Bhoot, CEO, Investment Services, Anand Rathi Shares and Stock Brokers said: “Investors should not panic and avoid any kind of reaction to the current crisis. As a strategy, investors should focus on domestic oriented businesses for now.”
Consider a Hedging Portfolio
Ajit Mishra, Vice President – Research, Religare Broking Ltd. said: “Investors can consider hedging their portfolios by investing in other asset classes. For example, gold tends to outperform during times of uncertainty and act as a natural hedge. does. Space within equities, one can focus on defenses like health care and pharma.”
Since the market crashed yesterday on the news of the outbreak of war, you must have thought of buying during the downtrend. So, to ensure that you effectively reduce your average rupee cost of investment, shop in a small systematic manner rather than doing everything within a day. Use this fall as an opportunity to buy systematically.
“Markets fall like this which provides great opportunities for investors. Use a staggered approach to invest idle cash as the market is likely to remain volatile for the next 6-8 weeks. A good investment strategy can be to park passive funds in arbitrage funds or liquid funds and use STP (Systematic Transfer Plan) to transfer to index funds or other equity funds depending on your risk appetite,” says Prabhudas Says Piyush Nagda, Head of Investment Products. Financial services company Lilladher.
wait and see strategy
Ravi Singh, Vice President and Head of Research, ShareIndia, said: “It is advised that all investors should follow a wait-and-see strategy and avoid any fresh entry for the time being. Long-term investors with an investment horizon of 3-5 years will find a good opportunity to hedge their portfolio when the global situation stabilizes.”
Top up your equity holdings
Deepak Jasani, Head of Retail Research, HDFC Securities said: “Investors who have not substantially invested in equities can take this opportunity to top up their equity holdings by lump sum investment or SIP.”
Invest in high quality stocks
Vikas Jain, Senior Research Analyst, Reliance Securities, said: “Investors should realign their portfolios with high quality large-cap stocks in sectors like private banks, IT, pharma and reduce commodity facing sectors as they are on the boil and may face more uncertainty in terms of earnings.”
Disclaimer: Disclaimer: The views and investment tips of the experts in this News18.com report are their own and not those of the website or its management. Users are advised to check with certified experts before taking any investment decision.
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