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Markets will remain volatile for the next few sessions. But market investors say that there are still positives that an investor can look at.
“The global risk off trade has impacted Indian equity markets also. India, however, derives some positives from the current global meltdown. Brent crude, at $44 per barrel, will ease the current account deficit further, which will also have a positive impact on inflation. This will be a serious positive for several Indian companies. The rupee depreciation will also be positive for exporting sectors and companies, especially the ones which have large exports to US. Thus, beyond the current sell-off, markets will likely focus on sectors which benefit on a fundamental basis.,” says Dipen Shah, Head of Private Client Group Research, Kotak Securities.
For mutual fund investors, things are relatively simpler. If you are investing through a systematic investment plan (SIP), a drop is generally good news because you will get more units for the same investment. For example, if your monthly investment is Rs 5,000 and the net asset value is 50, you would get 100 units. If the NAV falls to Rs 40, you would get 125 units. This would translate into higher returns when the markets start doing well. Market experts says that’s why say that investors should continue to invest and not worry about such market movements.
Nilesh Shetty, Associate Fund Manager - Equity, Quantum AMC, says: “Expensive valuations with weak corporate earnings growth meant the market had significantly higher downside risks. Weak global cues especially from China have acted as a trigger for this correction. Despite near term risks, lower market levels could prove to be a great buying opportunity for the long term investor.”
For ones who have invested a lump sum amount, it is advisable to stay put unless your investment tenure has been completed. Even if you have an investment tenure of five years, there is no reason to exit till it has been completed only because the market is falling. Events will keep on happening and market will move or down, depending on them. But for investors, targeted tenure should be pertinent.
Yes, stock markets can be frustrating sometimes, especially since investors were seeing some sparkle in the past year, after a long lull since 2008. But making money does need patience.
