There will be hits and misses for Sensex and Nifty. How should investors behave?
There will be hits and misses for Sensex and Nifty. How should investors behave?
Current market conditions in India are bullish. The majority of individuals would want to discontinue their SIPs now, book a substantial profit, and exit. Avoid being the majority. To benefit the most from the market, maintain your investment.
Yesterday, the BSE Sensex set a record high, and the Nifty50 was also rising steadily. Both indices, nevertheless, were driven into the red today, primarily by shares of FMCG, PSU banks, and this sent investors intending to leave the markets on a high into a state of jitteriness.
Nifty ended the day at 18,771.25 points, while the Sensex plunged 0.45% from its record high of 63,601.71 points to end the day at 63,238.89 points. However, experts advise sticking it out in the market rather than focusing only on short-term profits.
surpassing the 18,000 threshold. As a result, many investors who view market highs as a way to book profits ought to use care.
How should investors behave?
According to Viral Bhatt, the head of MoneyMantra, a personal finance adviser with offices in Mumbai, investors shouldn’t pick profit taking over methodical investing through SIPs just on the basis of the market’s recent bull run.
“The present bull run is still in its infancy, and the market still has a lot of room to develop. Additionally, there will always be ups and downs because the market is cyclical. Even while the market is currently performing well, this does not guarantee that it will always be this way. But you might be able to lock in some gains by continuing to invest through SIPs, the author observes.
It is obvious that more and more individuals are coming to the stock market because the number of registered investors on the BSE has increased by 23.54% since 2022. Positive purchase emotions from domestic and international institutional investors are fueling the rush even more. Up until June 22, 2023, FIIs and DIIs combined to invest a net total of Rs. 7,233 crore in the Indian markets.
In addition, worries about an oncoming US recession, the UK’s inflation rate remaining high and unchanged at 8.7%, and a slowdown in neighbouring China’s economy have further highlighted India as a desirable investment location.
FIIs have reportedly been enthusiastic about India’s growth story since March 2023, investing over Rs 27,856.48 crores in the country’s economy. This is partly a result of the success of small and medium-sized businesses.
The BSE SME Index has grown 14% over the past six months, with SMEs collecting more than Rs 2,200 crores through initial public offerings (IPOs) in 2022–2023.
During a bull run, when the stock market is experiencing an upward trend and prices are generally rising, SIP (Systematic Investment Plan) investing alone may not be sufficient to optimize your investment portfolio. Shifali Satsangee, a financial advisor, suggests the importance of reevaluating and rebalancing your portfolio during such periods to enhance its performance.
Reevaluating your portfolio means taking a closer look at your investment objectives and risk tolerance. Your investment goals may have changed over time, and it’s essential to align your portfolio accordingly. For example, if you initially had a long-term investment objective but now have a shorter timeframe, you might need to make adjustments to your portfolio to reflect this updated goal.
Similarly, assessing your risk tolerance is crucial. During a bull run, market sentiment is generally positive, and investors may tend to take on more risk. However, it’s important to understand your own risk appetite and make investment decisions accordingly. If you’re uncomfortable with a high level of risk, it’s advisable to ensure that your portfolio is not overly exposed to volatile or speculative investments.
Rebalancing your portfolio involves adjusting the allocation of your investments to maintain the desired balance and meet your objectives. In a bull market, certain investments may have performed exceptionally well and gained significant value, causing them to make up a larger portion of your portfolio. Rebalancing ensures that you sell a portion of these high-performing assets and redistribute the proceeds into other investments, including potentially undervalued or non-performing ones. This helps maintain diversification and manage risk.
Moreover, Shifali Satsangee emphasizes the importance of staying composed during market downturns. While it is difficult to predict market movements, periods of decline or volatility are not uncommon. By aligning your portfolio with your investment objectives and risk tolerance, you are better positioned to weather market fluctuations without succumbing to panic selling. Panic selling often leads to poor investment decisions, selling assets at low prices and missing out on potential recoveries.
Overall, the suggestion to reevaluate and rebalance your portfolio during a bull run is aimed at optimizing performance, aligning with your goals, managing risk, and promoting disciplined investing practices that can help navigate through different market cycles. It is advisable to consult with a qualified financial advisor or investment professional who can provide personalized guidance based on your specific circumstances.
