The volatility and the current market performance allude the investors to adopt newer strategies to tide through the current faltering market conditions.
Is it time to move out of Equity Market?
Or is it time to reconsider your asset allocation?
The selling pressure is visible with the fall in MidCap stocks at a volume of 10k-20k shares; we can call it selling or capitulation. Where even 20k shares have displayed a fall in the share price by 15-20%.
The fall has been sharper, leading to severe price correction in this market segment. While the large caps have witnessed a moderate price correction; this is definitely the time to go back to the basics, those investors who went overboard on equity need to reconsider their asset allocation on the highest priority.
Nifty Index is quoting at 8500 barring some 15 stocks, by definition it becomes the bear market. This leads us to ponder over an important point- that is for the demand to spur, what can be feasible options for the government to reconsider?
Are interest rate cuts the only factor that the market needs to step out of the slowdown?
The policy predictability contribute to the market as much as the interest rate cuts; to come out of the subdued market phase. A boost to an entrepreneurial ecosystem is as much required as any other corrective measure.
Meanwhile the investors feel the equity in their portfolio is superfluous, is it really the time to bank on debt funds to save your capital?
The wealth advisors suggest a proportionate mix of debt and equity.
Looking out for the corrective steps undertaken by the government; the approach of the investors should be that of “accumulation” rather than buying. If the market witnesses Interest rate cuts, change in taxation norms, encouragement to the entrepreneurial sector through policy predictability or reversal in the surcharge, it marks a smart move to start doing STP in small and mid caps over the next 6-18 months.
Expanding your risk appetite by stepping out the comfort of large and super large caps and stepping into the volatile small and mid caps is worth the risk involved, as both the prices and valuation are in favor of the investors.
Today what is looking safe isn’t cheap and whatever is looking cheap isn’t so safe, so while venturing into volatile market make sure you do it on an accumulating basis rather than at one go.
Eyeing the scenario, if we are growth driven, inflation can be battled without the need to create a hiding space in the market. In fact, the growth can be only fuelled with the money which brings us to our earlier stated point, that a boost is indeed required for the entrepreneurs at this point. The experiments with the policy introductions by the governments can not only balance the markets but also help them move up. And if say, some policies do not seem to work out, like the LTCG policy, the government can revise the policy in order to avoid situations of formation of market bottoms.
For an average investor to give a facelift to their portfolio, it is suggested to adopt an asset allocation approach.
In the debt component, an investor could opt for a mix of liquid funds and medium term balanced funds.
While hoping for the government to create demand by taking corrective measures and providing an appropriate supply, the markets can definitely look up in the long run.
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