The greater the volatility in the markets, the higher is the need to stick to investing doctrines. Time and again — wealth advisors suggest investors to maintain a long-term vision and not get carried away with the wild swings. Regardless of all this, the sharp swings do send investors into a tizzy.
As a result of the FIIs (Foreign Institutional Investors) selling last week, Indian markets saw a downswing, albeit the broader benchmark index recovered 1.01 percent on Friday. FIIs remained net sellers in October 2023 as they sold Indian stocks amounting to near ₹2,600 crore till October 27 — the highest since January this year.
We spoke to a few investment advisors to dwell deeper into it and find out what lies ahead in the financial markets.
“The market has corrected 4-5 percent already but there is a lot of volatility ahead in view of inflation, global risks and forthcoming elections in the five Assemblies. So, investors should invest only 15 percent of their investible corpus as of now, and invest the remaining 85 percent after the dust has settled,” says Sridharan S., a Sebi-registered investment advisor and Co-founder of Wealth Ladder Direct.
“Investors can look at the large and mid-cap funds,” he adds.
Ravi Saraogi, Co-founder, Samasthiti Advisors, says that he has not stopped investors from investing.
“Those who are investing for the long term should continue to invest and ignore this volatility. But those who have large amounts of money to invest can keep their money in liquid and money market funds and invest when there is a good opportunity,” he says.
He further adds that the volatility, so far, has led to market correcting only by 5-6 percent.
“This is not called correction per se. But since the investors are accustomed to the market going up and up, they are surprised at this downward movement,” Saraogi adds.
Some advisors suggest that investors should continue to align their investment with their long-term investment goals.
“Before deciding to invest, it’s important to align your investment goals and financial objectives with the mutual fund’s offerings. Key factors to consider include your risk profile, investment duration, liquidity, and tax impact,” says Deepak Gagrani, Founder, Madhuban Finvest.
“SIPs should not be stopped during the volatilities of the market. It helps in getting better returns over a long term. However, the short term investments shouldn’t be made in the equity market as of now,” says Renu Maheshwari, co-founder of Finscholarz Wealth Advisors.
Based on the above suggestions, we can list out a few suggestions that the retail investors can, and should, follow:
Long term goals: Think about the long-term vision and don’t get carried away with the short-term fluctuation.
Small change: The recent volatility led to the market-correction of only 4-5 percent. So, there could be far more corrections ahead.
Much lies ahead: A number of uncertainties lie ahead such as the geopolitical risks, inflation and elections in the five states. So, markets may move in either direction based on the outcomes of these factors.
Bet on long term: Stay invested in the long and mid-cap stocks, while the risk in small caps stays higher.
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Updated: 30 Oct 2023, 09:54 AM IST