A day after Wall Street witnessed its worst one-day sell-off since June 2020, domestic indices ended in a deep sea of red during the weekly F&O expiration session. The 30-share Sensex package plunged 1,416.30 points or 2.61 percent at 52,792.23. Its broader peer NSE Nifty50 lost 430.90 points or 2.65 percent to mark the worst day since February 24, 2022, closing near 15,809.40 points.
Index heavyweights such as Infosys, Reliance Industries Ltd (RIL), Tata Consultancy Services (TCS), HDFC Bank and ICICI Bank contributed the most to indices’ losses. ITC was the only stock in the Sensex package that ended with decent gains. Shares ended 3.43 percent higher after the company released March quarterly results on Wednesday. All sector indices also closed the session with deep cuts.
The volatility index rose more than 10 percent and ended near a two-month high.
Also read: Sensex Tanks 1,400 points, handy cracks near 15,800; Why the Indian stock market is falling today?
What investors should do now: Time to rearrange the portfolio?
Narendra Solanki, head of fundamental research and investment services, Anand Rathi, said: “Reshaping a portfolio should be part of every investor’s periodic exercise. At this point, long-term investors could continue to hold positions in existing companies as long as the business prospects for the company remain intact, as even good stocks undergo some correction during weak markets.”
Invest in high-quality mid- and large-cap stocks
Yash Gupta stock research analyst, Angel One Ltd, said: “Long-term investors should look at Rejig Portfolios toward large and mid-cap quality stocks. So from a long-term perspective, investors can try to invest 50 percent of the new capital in a diversified portfolio of large and midcap stocks or they can even try investing through the Nifty and Nifty Midcap 100 ETF. Short-term investors should be cautious and manage risk as we expect volatility in the markets to continue.”
Echoing similar thoughts, Manish Jain, fund manager, Ambit Asset Management said: “Yes, as long-term investors we have found that the impact is often exaggerated in our minds compared to the bottom line. Big companies are bought best at the worst of times. Valuations are fair, prices don’t match and long-term growth potential remains intact. The way we look at things – now is the best time to add good quality stocks to the portfolio from a long-term perspective.”
Be patient, stay invested
Abhimanyu Kasliwal, Choice Equities said: “Long-term investors assuming they have researched and entered their positions should be patient. Fundamentally strong companies have seen a correction and may see further correction, but those with a long-term horizon (3- 5 years) with no immediate liquidity needs should remain invested if the company, management and long-term prospects remain sound.”
Buy the Dip
Long-term investors can build value stocks during this dip as all sectors face a sell-off. Manoj Dalmia, founder and director of Proficient Equities, said: “Due to the weakening of the rupee, sectors related to exports such as IT, pharmaceuticals, metals, etc. will benefit.” Meanwhile, for short-term investors, Dalmia said the strategy could be to avoid a heavy position and buy at small amounts when the market falls, this will ensure it adds value in the long run.
Investors should be more concerned about economic volatility
“Portfolio reshuffling should be based on the reward of individual stocks rather than on how the broader market is doing. As long as the premise for buying a stock remains intact, a drop in the stock price makes it more attractive to an investor. However, if other stocks are available at an attractive valuation and offer a better reward for the risk taken, in such a case the investor may consider adding them,” said Vijay Singhania, Chairman of TradeSmart. More than the volatility in the market, an investor should be concerned about the volatility in the economy, he added.
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