Over the past seven trading sessions, major benchmark indices have been highly volatile due to geopolitical tensions. On Friday, the markets made a comeback with BSE Sensex reaching over 1,300 points at close and the NSE Nifty closing above 16,600. On Thursday, however, world markets collapsed after reports that Russia would go to war with Ukraine. Early in the afternoon, Russian President Vladimir Putin announced a “special military action” in eastern Ukraine. The sudden development surprised market participants and panic selling followed. Also in India, the broader Nifty 50 fell 4.8 percent to 16,248 points, while the Sensex fell 4.7 percent to 54,530. India’s volatility index VIX rose by 30.31 percent and closed at 31.98.
Experts believe that markets are likely to remain volatile for some time to come. Do you also need to sell quickly to limit losses? Or is there a better way to handle the situation, especially when the days ahead are unpredictable?
Don’t panic in falling markets
Volatility is inherent in stock markets. Historically, markets have also fallen in response to such situations – be it wars, pandemics, terrorist attacks, financial crises, scams, or others – and then bounced back. Roop Bhootra – CEO, investment services, Anand Rathi Shares and Stock Brokers, said: “Investors should not panic and avoid any knee-jerk reaction to the current crisis. As a strategy, investors should focus on domestically oriented companies for now.”
Consider hedging portfolios
Ajit Mishra, vice president of research, Religare Broking Ltd., said: “Investors may want to consider hedging their portfolios by investing in other asset classes. Gold, for example, tends to outperform in times of uncertainty and acts as a natural hedge. space, one can focus on defensive sectors such as healthcare and pharmaceuticals.”
When the markets collapsed yesterday on the news of the outbreak of the war, you may have been thinking about buying during the dip. So, to ensure that you effectively reduce your average rupee investment cost, buy in a small systematic way instead of going all in in one day. Use this fall as an opportunity to buy systematically.
“Such market declines offer excellent opportunities for investors. Use a diversified approach to investing idle money as markets are likely to remain volatile for the next 6-8 weeks. A good investment strategy might be to park inactive funds in arbitrage funds or liquid funds and use STP (Systematic Transfer Plan) to switch to index funds or other equity funds based on your risk appetite,” said Piyush Nagda, Head of Investment Products at Prabhudas. Lilladher, a financial services company.
Follow a wait-and-watch strategy
Ravi Singh, vice president and head of research at Shareindia, said: “It is recommended that all investors adopt a wait-and-see strategy and avoid any new entry at this time. Long-term investors with an investment horizon of 3-5 years will have a good opportunity to portfolio once the global situation stabilizes.”
Top up your shareholding
Deepak Jasani, head of retail research at HDFC Securities, said: “Investors who are not sufficiently invested in equities can take this opportunity to supplement their equity holdings, either through lump sum investments or SIP.”
Invest in high-quality stocks
Vikas Jain, senior research analyst at Reliance Securities, said: “Investors should reshuffle their portfolios with high-quality large-cap stocks in sectors such as private banking, IT and pharmaceuticals and cut the commodity-focused sectors as they boil and more may face uncertainties in terms of revenue.”
Disclaimer:Disclaimer: The expert opinions and investment tips contained in this News18.com report are their own and not those of the website or its management. Users are advised to contact certified experts before making any investment decisions.
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