Nirav Panchmatia's Blog

Don’t be Adventurous; Approach this Market Systematically

Dear Investor, 

As you can would have noticed the Indian Stock Markets are continuously falling since Budget (Feb 1st) day for various reasons…

 

While the Large caps have not fallen much, there is HUGE Correction in MID & SMALL Cap stocks over the past few Months

 

While the Year To Date (from Jan 1st 2018 till date) returns of Sensex & Nifty 50 are 4.2% & 2.6% respectively, over the same period the YTD returns for Midcap & Smallcap Indices are (-11.4%) & (-16.5%) respectively….

In fact these are average returns, some Midcap & Smallcap Stocks , of low Quality have fallen as much as 25 to 40% over this period….

Why this correction????

 

There are various reasons for correction in the market

 

  1. Continuous Selling by FIIs
  2. MF recategorization
  3. Rising Crude Prices
  4. Rising interest Rates in US & now in India
  5. Political Uncertainty in 🇮🇳India

 

Now you can’t expect the Stock Markets to rise all the time especially if previous year was good…

 

Again what is a Fall in Market ?

 

A Discount Sale & opportunity to BUY / INVEST

 

An SIP investor should rejoice this correction & should increase his SIPs till it hurts him /her …

Why am I saying so???

2018 was always going to be a year of Volatility; This is a Election Year with 4 State Elections & 1 Central Election…So there is Political uncertainty until May 2019 when Central Elections results will be out & we shall know which political party forms the Govt…

 

So, from now till 2019 May, it shall be a news driven market…at every positive /negative news the market shall over react…Hence VOLATILITY…

 

Now, is there a way of benefitting out of this situation ?….There sure is …

 

Lets first understand What not to do over next 12-15 months? 

 

  1. This is not a year to be ADVENTUROUS at all so stay away from directly Investing in Stock Market
  2. Don’t fall prey to TIPS; you might end up loosing your entire Capital…
  3. Stay away from Midcaps & Smallcaps
  4. Don’t put Lumpsum Investments at one go in Equity Mutual funds
  5. Don’t Invest even in Mutual Funds without PROFESSIONAL ADVICE…

(it is in years like these that the Value add your ADVISOR brings on the table gets appreciated & his Advising Skills come to one’s rescue)

 

How to benefit from this Volatility ???

 

There are only 3 ways to tackle this Roller Coaster Ride in the Market

  1. Invest SYSTEMATICALLY
    1. Via SIPs
    2. Vis STPs (Systematic Transfer Plans)
  2. Invest via Asset Allocation Funds or Hybrids
  3. Invest in Debt Mutual Funds

 

ASSET ALLOCATION Funds & SIP / STPs are the 2 terms that one should not forget this year…

 

Anybody who follows this approach over next 15 months will benefit immensely from this Market Volatility & will stand to gain handsomely over next 3 Years…

 

Also,  Consider investing Lumpsum money in Debt Mutual Funds for a period of 1 to 3 years….if you want to avoid risk completely, else invest in Asset Allocation Funds or Hybrids…

 

BULL Market is very much Intact….

Remember one thing, we are in the middle of a BULL Market & this Bull market is not going to end so soon; All Bull Markets experience at least 2 to 3 more than 20% corrections; so 2018-19 will be that Correction year within this BULL Market that will end

up creating Immense Wealth for Savvy & Rational Investors…so this correction is actually a blessing in disguise…Make hay while the sun shines….

 

Invest with Caution….Caveat Emptor….


Print pagePDF page

Leave a Reply

Your email address will not be published. Required fields are marked *