Investment Strategy amid volatility

by otopenews

The effect of the war on Indian markets lasted a mere seven days with the bottom being established on the eighth-trading day. Thereafter in another seven days, markets have overtaken the levels from where they began to fall. Currently, Nifty is consolidating in the 17000-17400 band.

Current Market Outlook

  • Markets have been very volatile majorly owing to geopolitical tensions between Russia and Ukraine.
  • India VIX is showing no signs of cooling below 22%
  • Brent crude prices surging above USD 120 a bbl. and are already positioned to hit USD 145 a bbl. in the coming days.
  • We expect the rupee to come under severe stress and thus may trigger major unwinding in financial stocks.
  • The US FED has raised interest rates for the first time since 2018 and kept the rate at 0.25%-0.50%.  Experts believe that going forward one would see 4-5 rate hikes in the coming 12 months or earlier.
  • Corporate results are around the corner and it would be interesting to see how corporates have fared. The margin pressure is expected to be witnessed by most of the corporates along with the demand slowdown.

Also Read: Safest Investment with high returns in India

Though the performance of the market is improving, it is not stable enough to be considered as an investor-friendly market. Therefore, making any investment-related decision amidst the current, highly-volatile market situation can put the investment at risk.

Moreover, the new investors having less experience are advised to avoid getting carried away by any kind of speculations and requested to follow these beneficial recommendations by the market experts;

  1. Do not enter the market in the current situation to make some quick bucks in the short term as it is extremely difficult to predict the market movements for now.
  2. The chances of sharp rallies would also reduce from hereon as we enter the phase where markets look for consolidation.  A safe strategy would be to restrict oneself to the large-cap space only. Trade cautiously and allow markets to consolidate.
  3. Long term investors should stay invested and continue with SIPs. They should not worry about near-term volatility.
  4. Also, if you are a long-term investor and have some lumpsum amount with you, then you can park a part of it in good quality stocks and invest in a staggered manner in the next few months. This will help in averaging.
  5. Invest a small portion in Gold and Silver as well as it is expected to rally owing to the geopolitical tensions, higher inflation, rising crude prices, and uncertainty. Also, Silver is expected to outperform the yellow metal this year due to an expected increase in industrial demand from electric vehicle makers.
  6. In the Debt space, one can invest in short-term bond funds now, as bond prices are expected to fall further over the next year. After that, as prices fall, one could invest in long-term schemes.

Above all, it is always better to consult an experienced Certified Financial Advisor to help you make a well-researched, well-thought, and wise investment decision in order to keep your investments safe and secure, and risk-free.

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